A Closer Look At The FTSE 100 | The Motley Fool UK | Summary and Q&A

TL;DR

The Footsie 100 index is down 5% in 2014 due to fears of slowing emerging market growth, but long-term investors believe it will continue to climb.

Key Insights

• 🐢 The Footsie 100 has declined by 5% in 2014, primarily due to concerns over slowing growth in emerging markets.
• 🍉 Large companies in the Footsie 100 need exposure to emerging markets for long-term growth.
• 🫰 The concentration of large companies and their reliance on commodities make the index susceptible to shifts in global demand for these resources.
• 🇨🇳 The potential shift in China's economy could have a significant impact on the Footsie 100.
• 🧗 Long-term investors believe that the market will continue to climb despite the current decline.
• 💗 Economic growth is expected to shift from developed markets to emerging markets, and companies with access to these growing markets will have an advantage.
• 🖐️ Brands and reputations of companies in the Footsie 100 will play a crucial role in their participation in emerging market growth.

Transcript

hey fools welcome we're here with a look at the Market's 100 biggest companies the footsie 100 it's been a tough go so far in 2014 for the footsie since January 22nd the index is actually down 5% but Nate 2013 was a great year for the footsie so what's going on uh well after going up about 15% last year we've hit a bit of a a TR trouble spot here u... Read More

Questions & Answers

Q: What is causing the decline in the Footsie 100 index?

The decline can be attributed to fears of slowing growth in emerging markets, which is impacting companies with exposure to these markets. Additionally, the concentration of large companies in the index and their reliance on commodities are contributing factors.

Q: Why is exposure to emerging markets important for large companies?

Large companies need exposure to emerging markets for long-term growth, as markets like the UK do not provide sufficient opportunities. The emerging market consumer represents a significant source of growth for these companies.

Q: How does the concentration of large companies in the Footsie 100 affect the index?

The five largest companies in the Footsie 100 make up 25% of its market cap. This concentration means that any impact on these companies can have a disproportionate effect on the overall index.

Q: What is the potential impact of China shifting its economy on the Footsie 100?

If China shifts its economy, there could be a decrease in demand for raw materials such as oil, gas, iron ore, and copper. This would negatively impact countries and companies involved in producing these resources, including those in the Footsie 100.

Summary & Key Takeaways

• The Footsie 100 index has experienced a tough start in 2014, declining by 5% since January 22nd.

• The decrease in the index is attributed to concerns about slowing growth in emerging markets, which is impacting companies with exposure to these markets.

• The concentration of large companies in the Footsie 100 and their reliance on commodities could be a reason for the significant decline.