FTSE trend away from commodity stocks

The trend away from commodity stocks has continued with Berkeley Group replacing Weir in the FTSE 100.

FTSE trend away from commodity stocks

Commenting, Russ Mould, investment director at AJ Bell, said: “The third-quarter FTSE index review becomes effective today as Berkeley Group replaces Weir in the FTSE 100.

“This reflects an ongoing trend in the UK’s leading benchmark index, as 14 commodity-related stocks have been demoted since 2012 and their places have generally been taken by more domestically-oriented plays like Intu Properties, Merlin and Sports Direct, as well as house builders Barratt and Taylor Wimpey.

“The market’s love-affair with commodities (not to say emerging markets exposure) continues to cool – Glencore was the last miner to enter the FTSE 100 elite in 2011 – and history suggests it could take some time for investors to recover their ardour.

“During the 1998-2000 bubble a technology company entered the FTSE 100 on 16 occasions times in 1998-2000 (including some more than once) only for 12 to shoot straight out between 2000 and 2003. Only Autonomy and ARM subsequently made it back to the big league and it took them seven and nine years respectively to do so.”

There are still 10 resource related firms left in the FTSE 100: Anglo American, Antofagasta, BHP Billiton, BG, BP, Fresnillo, Glencore, Randgold Resources, Rio Tinto, Royal Dutch Shell. Shell is in the process of acquiring BG.

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