The Origins of the Share Index
The average performance of world stockmarkets is measured by a number of indices. There are indices for all the world, for major and for minor stockmarkets and for major and lesser stocks.
The oldest index in the UK is the FT30 (or FT-ordinary) index, created in 1935 by the Financial Times. Previously, only estimates of stockmarket performance were available. The index was based at 100 in 1935, and currently exceeds 1700. This index takes no account of dividends paid and considers equally the share prices of thirty of the largest industrial UK companies chosen to represent the market as a whole. The companies are changed occasionally to reflect changes in company size or takeovers.
The FT-Actuaries (FT-A) All Share index was introduced in 1962 and the FTSE 100 in November 1983. These later indices measure representative samples respectively of the top 800 and top 100 companies in the UK, and their performance is supposed to track the movement of the market as a whole. Whereas the older FT30 index gives equal value to the shares of each company, and is now primarily of historical value, the FTSE 100 index is weighted so that larger companies have a larger effect on movements in the index. The FTSE 100 index is now plotted every minute by the Stock Exchange and has been designed to mimic closely the larger FT-A index. The FTSE MID250 index (1993) deals with the 250 next biggest companies after the FTSE 100.
There are many indices for foreign stock markets. The USA equivalent of the FT30 index is the DOW index, monitoring leading US stocks. The equivalent of the FTSE is the Standard & Poors index, following 500 American stocks. For Japan, the most-quoted index is the Nikkei-Dow. The Morgan-Stanley index assesses the weighted average performance of the world's stockmarkets, and is measured in dollars. The FTSE-Eurotrack 100 is a composite index of various large European companies but does not include companies based in the UK.
