UK tech company growth heralds return to stability

The value of UK-listed tech companies has risen 9.7 per cent in the first quarter of 2010, signalling a potential return to stability, according to the latest Grant Thornton technology index.

Technology companies did better than All Share indexed firms, which saw gains of 5.4 per cent, and those on the FTSE 100, which enjoyed just a 4.9 per cent boost to their valuation.

Since Q1 2009, technology company valuations had more than doubled.

Niki Dixon, head of technology at Grant Thornton, said the results showed the important contribution technology was making to the the UK economy.

"Since Q1 2009 the valuation of Technology Index companies rose rapidly. Q1 2010 saw continued growth, albeit at a slightly slower and more sustainable level," said Dixon.

"This may signal a return to stability as technology stocks often improve ahead of the general market as the recession comes to an end."

Nixon said semiconductor-related businesses were leading the valuation rise. The semiconductor category saw an average increase of 22.4 per cent in the first quarter, up from a 14.6 per cent rise in the last quarter of 2009.

"As the emerging economies return to significant growth we are seeing increased demand for electronic devices, which has increased the appeal of semiconductor companies to the market," said Dixon.

Worst performer among tech categories was fixed-line telecommunications, which shrank four per cent in the quarter. The sector is seen as less attractive than mobile telephony or wireless offerings, according to Dixon.

Grant Thornton's Technology Watch Index is a market capitalisation-weighted index representing 142 UK-listed technology companies not on the FTSE 100, based on data from Thomson Reuters Datastream dated 1 April.

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