how many companies on LSE?

london.cidade

the below is from the wiki.
The main market is home to Over 1,300 large companies from 60 different countries.
There are currently 2,600 companies from over 60 countries listed on London Stock Exchange, of which 1151 are on AIM, 44 on the Professional Securities Market and 10 on the Specialist Funds Market.

1) if the Main market is consist of 1300 companies, FTSE All-share comprising around 600 companies. where are the rest of 700 companies?

2) if the AIM is consist of 1151 companies, FTSE AIM All-share comprising around 800 companies. where are the rest of 350 companies?

Are there companies which don't belong to any indices? or am I missing any indices which don't overlap with all-share indices? thank you

Linton

london.cidade wrote: »

the below is from the wiki.
The main market is home to Over 1,300 large companies from 60 different countries.
There are currently 2,600 companies from over 60 countries listed on London Stock Exchange, of which 1151 are on AIM, 44 on the Professional Securities Market and 10 on the Specialist Funds Market.

1) if the Main market is consist of 1300 companies, FTSE All-share comprising around 600 companies. where are the rest of 700 companies?

2) if the AIM is consist of 1151 companies, FTSE AIM All-share comprising around 800 companies. where are the rest of 350 companies?

Are there companies which don't belong to any indices? or am I missing any indices which don't overlap with all-share indices? thank you

There is the FTSE Fledgling index which isnt included in the FTSE AllShare. The problem is when you get to really small rarely traded companies the index wont mean very much. The current price of a share may be based on a trade made months ago and as soon as someone actually buys or sells the price could change considerably.



Many global companies have a secondary listing on the LSE - Total Oil, BASF for two. These are covered by their primary listings on some other exchange and so not included in the FTSE indexes.

bowlhead99

Taking the FTSE All-Share as an example, it's not really all shares, it is simply the FTSE100 plus the next FTSE250 plus about 300 or so Small Cap shares which meet the liquidity / tradeability requirements to be included in the Small Cap index. It covers about 98% of the UK market by value https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=ASX&IsManual=False.

Then there is the FTSE Fledgling index which covers another 90-100 or so companies that are too small for the Small Cap index. This one isn't screened for liquidity and - as with the Small Cap - nobody sells an open ended index fund based on it because the capital coming into it could not be easily deployed, nor easily got back if the investor wanted their money back (https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=NSX&IsManual=False).

A lot of the larger (~£100m market cap) companies in that Fledgling index (70% by value) are investment trusts, investment companies or financial businesses. The median company in the index is about £40m, while the smallest one at any point in time will be one which was worth including at the once-yearly index update last summer but has since gone bust or dropped down to a million or so of value.

Then there are a bunch of other companies which are too small to bother with, or where the company might be valuable but the equity shares are not in free float (technically listed on the stock exchange but no material amounts of shares actually made available for trading by the majority owners), so they are not in any index.

And there will be some foreign companies listed here which have their primary listing elsewhere, so the index-makers don't include them because they want to be able to add up (e.g.) the FTSE UK All-Share and FTSE Developed Europe ex-UK indexes and get to FTSE Developed Europe index, without double counting a company along the way.

Similarly on AIM you have the AIM 50 and the AIM 100 and then the AIM All-Share; the latter is the one that includes all the companies that qualify under FTSE's rules on both liquidity and investibility grounds, but you're right it is only about 800 companies.

There is little point in constructing indexes to track all the shares that exist. For example, the FTSE All-Share is only 630 companies at the moment but as mentioned it already covers 98% of the value on the UK main market. It covers £2.23 trillion of market capitalisation as of last Friday. If there was an 'Main market All-share plus AIM100' combined index, with the companies in both indexes making up a proportionate share by value, the percentage movements from day to day would give you basically the same result as the Main market All-Share on its own. Because the total market cap of the AIM100 is only about 44bn. So Main Market UK All-Share is 2.23 trillion out of the overall 2.27 trillion, and AIM100 is 0.04 trillion.

People only create and maintain indexes if someone wants to buy the data or licence them to create products. The smaller companies that are difficult to trade are not going to be included in an index tracking investment product because they are difficult to trade. And if they are a lot smaller than the biggest index constituents, it makes no practical difference to the result of the index if they are included or not, so the index producer (eg FTSE Russell, or MSCI) will not bother including them, even though as a company, they do exist and have a listing on the stock market.

london.cidade

bowlhead99 wrote: »

Taking the FTSE All-Share as an example, it's not really all shares, it is simply the FTSE100 plus the next FTSE250 plus about 300 or so Small Cap shares which meet the liquidity / tradeability requirements to be included in the Small Cap index. It covers about 98% of the UK market by value https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=ASX&IsManual=False.

Then there is the FTSE Fledgling index which covers another 90-100 or so companies that are too small for the Small Cap index. This one isn't screened for liquidity and - as with the Small Cap - nobody sells an open ended index fund based on it because the capital coming into it could not be easily deployed, nor easily got back if the investor wanted their money back (https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=NSX&IsManual=False).

A lot of the larger (~£100m market cap) companies in that Fledgling index (70% by value) are investment trusts, investment companies or financial businesses. The median company in the index is about £40m, while the smallest one at any point in time will be one which was worth including at the once-yearly index update last summer but has since gone bust or dropped down to a million or so of value.

Then there are a bunch of other companies which are too small to bother with, or where the company might be valuable but the equity shares are not in free float (technically listed on the stock exchange but no material amounts of shares actually made available for trading by the majority owners), so they are not in any index.

And there will be some foreign companies listed here which have their primary listing elsewhere, so the index-makers don't include them because they want to be able to add up (e.g.) the FTSE UK All-Share and FTSE Developed Europe ex-UK indexes and get to FTSE Developed Europe index, without double counting a company along the way.

Similarly on AIM you have the AIM 50 and the AIM 100 and then the AIM All-Share; the latter is the one that includes all the companies that qualify under FTSE's rules on both liquidity and investibility grounds, but you're right it is only about 800 companies.

There is little point in constructing indexes to track all the shares that exist. For example, the FTSE All-Share is only 630 companies at the moment but as mentioned it already covers 98% of the value on the UK main market. It covers £2.23 trillion of market capitalisation as of last Friday. If there was an 'Main market All-share plus AIM100' combined index, with the companies in both indexes making up a proportionate share by value, the percentage movements from day to day would give you basically the same result as the Main market All-Share on its own. Because the total market cap of the AIM100 is only about 44bn. So Main Market UK All-Share is 2.23 trillion out of the overall 2.27 trillion, and AIM100 is 0.04 trillion.

People only create and maintain indexes if someone wants to buy the data or licence them to create products. The smaller companies that are difficult to trade are not going to be included in an index tracking investment product because they are difficult to trade. And if they are a lot smaller than the biggest index constituents, it makes no practical difference to the result of the index if they are included or not, so the index producer (eg FTSE Russell, or MSCI) will not bother including them, even though as a company, they do exist and have a listing on the stock market.

great explanation, thank you very much!