July trading figures for the Redux Global ICT 100 Index (‘R-100’) bear witness to a 4.48% increase across the 100 companies that form the R-100. The Index closed on 29 July at 1039.59, up from 994.92 on 01 July, 2005.

It’s the highest level yet achieved by the R-100 since its July 2004 launch (bettering the previous peak of 1027.06 on 31 December 2004) and the second highest monthly gain after the 5.9% to the end of May 2005. The new mark also places the R-100 at nearly 11% up from 12 months ago.

Reaction was quick to follow. “This just shows that we as an industry are doing the best things for the correct motives and the markets will find this out and act [accordingly]”, said a senior telco executive, on hearing news of the R-100 yesterday. One investment manager added that “if you placed your money on these companies one year ago then, with dividends, you might be looking at a ten percent return.” When pressed, he/she admitted that this would not be a sound route for investors thanks to the problems of non-nationals investing in markets such as the US and the Far East. But he/she did not advise against it, either, although TelecomRedux has never promoted the R-100 as a ‘tipsheet’ for small investors.

Everyone comes to the party
Our recent analysis of the first twelve months of activity in the R-100 showed a tectonic relationship between its three regional components (click here if you want to see that along with some badly drawn but brightly-coloured charts). This showed that while a strong European or American performance could drag the R-100 upwards, they too often cancelled each other out and left Asia to determine a subtle rise or a subtle decline in the Index overall. The irony here is that Asian stocks are the most volatile and, over the last 12 months, the most under pressure.

Not last month. Asia-Pacific R-100 shares led the way, up 5.7%. North America followed at 4.9%. Europe trailed in with 3.13%. This potent combination took the value of the R-100 up by US$150bn (and some change), to US$3,530.85bn. For the innumerate amongst you, that’s three point five trillion dollars with thirty billion left over for tips, incidental expenses etc.

In you come, out you go
This month saw the exclusion and inclusion of firms within the R-100 as part of our annual calibration of the index.

For the record, the new stocks in the R-100 are Cap Gemini, Mobistar, Türkcell, ARM Holdings and DIRECTV. The outbound stocks are TIM (de-listed), AT&T (on the verge of being de-listed), Filtronic, Marconi (two awful UK manufacturers that will not trouble the scorers for too much longer) and Sagem (which has been subsumed into aerospace manufacturer Snecma, in a group now called ‘Safran’*). More details of the latter can be read at the bottom of this story (hence the asterisk).

The newcomers were adjudged in terms of market cap and past performance to be neutral for the purposes of the R-100 in terms of total market cap. They were also retro-fitted into the 01 July result, so that the latest numbers are utterly consistent with the last month’s progress. A full list of the companies included in the R-100 can be found by clicking here.

Sustainable development?
Each time technology shares in the world’s major region’s rise, profit-taking sends them back down again. For the companies involved and the individuals behind them – not just executives but rank-and-file employees, too – this is frustrating. It’s one step forwards and two steps back.

But not now. Just 14 out of 100 worldwide R-100 stocks fell last month. You can’t point at a sector – telco, mobile, manufacturing, software, new media – or a region – Europe, the US, Asia – that is not up, up and attempting to get away.

It’s summertime and anything can happen however easy the living (last year saw falls of 6.3% and 0.9% in July and August respectively). The sense that hard work and hard cash are behind the robust performance of R-100 companies can’t be ignored, however.

One more month of this and Redux Mission Control would be bold enough to suggest that escape velocity has been reached. Now, if only we knew where we were headed, that would be fine...
Jim Chalmers

* Those of us who love corporate-speak cannot miss out on this official wording on the Sagem/Snecma merger: “The name SAFRAN has been chosen following a process of reflection, creation and validation.The employees of both Snecma and Sagem played an active role in the entire process. The new name was selected from among a total of 4,250 names submitted, including 1,750 proposed by employees**. The new name SAFRAN was chosen for the broad range of meanings it evokes for the new group. First, it's the French word for the rudder blade on a boat, thus encompassing the ideas of direction, goal, heading, movement and strategy.”  More profundity: “SAFRAN is also of course the name of one of the spices ("saffron") that inspired the beginning of international trade, opening channels between East and West. Furthermore, it is remarkably compatible with international usage, since it has the same root in virtually all countries, with just the spelling changing slightly.”

** One can only assume that the other 2,500 were suggested by consultants.