Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Technology

Hot tech sector prompts shakeup in S and P 500 stock indexes

The change will split some of the five “FAANG” behemoths associated with the stock market’s surge into different groups, allowing investors to have more exposure to the companies.

New YorkUnited States, Sep 21 – The hot and rapidly changing tech sector has prompted the S&P 500 stock index to reshuffle its components, opening up more chances to invest in Google, Netflix, Facebook and other stars after Friday’s trading session.

Facebook did not yet exist and flip phones were cutting edge in 1999 when the industry classification system was launched, but much has changed in tech, telecommunications and media.

The reorganization of the industry groupings, the biggest in the history of the system, affects three of the 11 sectors within the S&P 500.

A new “communication services” group has been created that will be bigger and more growth-oriented than the sleepy “telecommunication services” sector it is replacing.

The change will split some of the five “FAANG” behemoths associated with the stock market’s surge into different groups, allowing investors to have more exposure to the companies.

The shift comes only weeks after Apple and Amazon eclipsed $1 trillion in market capitalization and shows again how technology companies are moving into ever-expanding economic terrain.

“The ways in which people communicate and seek information have transformed,” S&P Dow Jones Indices said.

“Integration between telecommunications, media, and internet companies in terms of both infrastructure and content have advanced the communication industry into a much broader field as evidenced by the convergence between telecom and cable companies.”

The rejiggering of the groups will lead to a shifting of billions of dollars of shares in these companies, especially through exchange-traded funds that are linked to S&P sectors.

While analysts do not expect a pickup in volatility because the move was announced last year, further investment in technology is likely because there will now be two groups heavily weighted to the sector instead of one.

Advertisement. Scroll to continue reading.

“Because some portfolio managers might have a restriction on how much they can go in, if they want more exposure on the technology, this will be one way to do it,” said Quincy Krosby, chief market strategist at Prudential Financial.

The change will leave Apple as the only “FAANG” member in the “information technology” group.

Facebook and Google — through its parent Alphabet — were shifted to the new communication services group from information technology, while Netflix, another FAANG member, was moved into the new group from the consumer discretionary sector.

The fifth FAANG member, Amazon, will remain in the consumer discretionary group.

Other prominent companies moved into communication services include Disney, Comcast, Twenty-First Century Fox, eBay, Twitter and CBS.

In all 24 companies in the S&P 500 are being shifted, with the top 15 having a total market capitalization of about $2 trillion, according to S&P Dow Jones Indices.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Headlines

NAIROBI, Kenya, Mar 16 – The World Bank has given the Kenyan government USD 60 Million (Sh6.1 billion) to help combat the deadly coronavirus pandemic...