Shares indices in August

It was yet another positive month for UK quoted SITS companies. The FTSE SCS Index rose by 6.2% which means that we are in 'positive territory' to the tune of 3.7% for the YTD. That compares with a near 13% decline in the FTSE100 and an 11% decline in the NASDAQ YTD. As you can see from the table below, the telcoms sector has shared in the gains - for once -albeit in a much more modest manner. Even Europe was positive.

It was, of course, acquisition activity which, yet again, boosted the UK SITS stocks with Netstore and Axon both recording 30%+ gains as a result of bids. Although, to be fair, Logica wasn't too far behind with an excellent c25% gain on positive reaction to their interims.

Although it really is great to see the sector bucking the trends, I do have an increasing feeling of unease. M&A is a 'one-off' benefit. It will be much more difficult to repeat when all the good candidates have gone! I also have a feeling that directors and analysts alike are 'Living in Denial'. There seems to be an accepted view that SITS will buck the recessionary trends - I do not buy that. Although I do believe that the sector is much better positioned than in previous downturns and that some SITS companies might actually benefit in a slowdown, if Alastair Darling's outlook comes to pass (for once I agree with his views...) then SITS just must be affected too. It will suffer all the more if companies are complacent and therefore ill-prepared.