The Paris Bourse plans to unveil two indices that will track the red-hot French technology sector and could become as popular as the Nasdaq and Nasdaq-100. The indices - whose composition has yet to be disclosed - will give French and foreign investors alike new trading tools at a time when the global craze for high-flying "new economy" shares seems nowhere near abating, analysts said. "This is a good initiative because there is a need for a greater selection within the new technology sector," Jacques Chahine Finance Strategist Jean-Luc Buchalet said.Technology, telecommunications and media stocks have spearheaded one rally after another on the Paris bourse where a slew of stocks have recorded triple-digit gains in recent months. The Nouveau Marche for growth stocks, while it long lagged its German Neuer Markt counterpart, has been on fire since last fall as well, up 91 per cent this year. "The US has the Nasdaq and the Nasdaq-100 indices. Paris may want to have the same because there are a lot of technology stocks in France," a source close to Paris Bourse said. Paris Bourse said the two indices would be made up of stocks whose core business is technology in all sections of the Bourse - from the main "monthly settlement" market to the Nouveau Marche.
The Paris exchange plans to launch an index consisting of technology stocks whose composition will vary and a narrower index of 50 of the largest and most liquid stocks from the "all share" index. While the Nasdaq tracks the full spectrum of newer U.S. stocks, the Nasdaq-100 lists the biggest capitalisations and is regarded by many market specialists as the index to follow. Paris Bourse pointed out that over 100 stocks listed on the bourse - half of which were floated in the last two years - do business in technology. The sector has a growing weight on the Paris Bourse. With a market capitalisation of 360 billion euros, these companies make up nearly 25 percent of the bourse's overall capitalisation, all markets included, bourse statistics showed.
Paris Bourse is launching the two indices as equities markets are going through a period of strong volatility - which means the new gauges may become important guideposts, mainly for arbitrage purposes against similar indices elsewhere. "Regardless of current valuation problems and of the consolidation of technology stocks, the trend behind techs is a deep movement. Fund managers need benchmarks. This is all part of stock-picking within the sector," Chahine's Buchalet said. The composition of the two indices will be crucial for ensuring their success with investors, analysts said. "It is very difficult to build a tech index because there is a lot of confusion about what a tech stock is. I just hope the new indices will be very selective," they added.
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