FTSE 100 set to hit new record

By Alex Hawkes, Financial Mail On Sunday

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The booming FTSE 100 index of leading companies could this week finally exceed its dotcom peak as investors await a 14billion boost from Vodafone’s sale of its stake in Verizon Wireless.

The index, which reflects the daily changes in value of blue-chip firms as their shares are bought and sold, was within touching distance of its 1999 all-time high on Friday, closing at 6,838.06.

Major pension funds are obliged to invest a certain proportion of their funds in FTSE 100 companies and many of those institutional investors will benefit from Vodafone’s massive payout due this week.

Breaking through: The Footsie is close to exceeding its dotcom peak

Breaking through: The Footsie is close to exceeding its dotcom peak

The FTSE 100’s record high came on December 30, 1999, when it closed at 6,930.2, having traded as high as 6.950.6 earlier that day.

As well as shares in Verizon, Vodafone shareholders will receive 14billion in cash payments next week, with the bulk of the money expected to be ploughed back into big FTSE blue-chip stocks.

Lars Kreckel, an equity strategist at fund manager Legal & General, said that while the FTSE 100 index was riding high, profits now were much higher than they were then.

Kreckel expects the index to return 12 per cent over the next 12 months and thinks the FTSE 100 will hit 7,300 by the end of the year.

Blue-chip firms’ profits announced in recent weeks have been weaker than some expected, with profit warnings spiking at the end of 2013, according to accountancy firm Ernst & Young. But the alerts were not at disastrous levels, meaning investors remain optimistic.

The index has come close to breaking through its dotcom peak before, so optimists may yet be disappointed. Last month, it got to 6,867 and in May 2013 it was 6,875.

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