The UK market

As a UK investor, you’ll probably be most familiar with your national stockmarket. It is full of household names, which can offer a certain reassurance that you know the businesses in which you are investing. Shares here are traded on the London Stock Exchange, and are split across two primary markets – the Main Market and AIM – with indices tracking the performance of different elements. The FTSE 100 Index tracks the largest 100 companies (which make up around 80% of the stockmarket by value), followed by the FTSE 250 Index.

Combine the two and you get the FTSE 350 Index. Smaller companies make up the remainder, and bring the total market capitalisation of the UK market to around £3,500bn. AIM (Alternative Investment Market) is composed mainly of smaller, highgrowth companies and now boasts more than 1,000 participants (Source: ftse.com as at 31 Dec 07).

Average company profits have grow in recent years, buoyed by strong economic growth, merger and acquisition activity and efficient management. Some of the largest FTSE 100 companies are global leaders in their fields, which means future
progress is increasingly influenced by events in other parts of the world, and many UK companies are now as dependent, if not more so, on international business than on the UK. The UK is traditionally seen as a 'defensive' market because it is
dominated by bank.

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