FTSE Russell Insights

The UK’s very global country index

As we celebrate the FTSE100 Index's 40th birthday.,we bring you fresh insights and intelligence from our market experts.

Norbert Van Veldhuizen

Head of Equity Index Product, EMEA

The FTSE 100’s forty years of openness to some of the best global companies should be a cause for celebration.

  • The FTSE 100 has a heavy influence of foreign earnings, which some commentators regard as equivalent to failing to support the local team.
  • The FTSE 100’s international diversification is not a recent phenomenon, but rather a continuation of the UK’s global and open stock market tradition.
  • The FTSE 100’s foreign exposure is a source of strength, not weakness, as it reflects the UK’s ability to trade with the world.

Some countries are wide open to cross-border economic activity.

Small, specialised centres for the trading of goods and services--like Hong Kong, Luxembourg and Singapore—regularly record volumes of imports and exports that are three or four times larger than their gross domestic product (GDP).

But larger countries are often inward-looking. Their domestic markets may generate adequate sales and profits and there’s little need to venture abroad for business. The US, for example, has a trade-to-GDP ratio of only 25%. For China, the figure is a little higher, at 37%.[1]

As a medium-sized economy, the UK’s trade-to-GDP ratio is near the global average, at 55%.

But the same can’t be said of the country’s best-known share index, the FTSE 100, which celebrates its 40th anniversary in January 2024.

Over four-fifths of the sales of FTSE 100 constituents now come from outside the UK.[2]

Put another way, the hundred companies that make up the index are substantially more global in outlook than the country in which their shares are listed.

[The FTSE 100 comprises the largest 100 companies, measured by full market capitalisation, with a premium listing on the London Stock Exchange. A premium listing carries high compliance and disclosure requirements.]

Interestingly, the mid-cap FTSE 250 index (which consists of the next 250 premium-listed companies by size from the London Stock Exchange) is more domestically focused. It has an overseas sales ratio that’s close to 55%--about the same as the UK’s overall external trade-to-GDP ratio. 

The FTSE 100 index’s heavy weightings in the natural resources (energy and basic materials) sectors mean it is highly exposed to world economic activity. 

The index also reacts to changes in the value of the UK currency (if sterling falls, the FTSE 100 often gets a boost as those foreign earnings are suddenly worth more when translated to pounds).

ftse 100 vs ftse 250 industry weights (%)

Source: FTSE Russell as at end of July, 2022. Past performance is no indication of future performance. Please see end for important disclosures.

Should the wide variety of FTSE 100 members—and the far-flung sources of their revenues—surprise us? 

Some commentators regard the heavy influence of foreign earnings on the FTSE 100 as equivalent to failing to support the local team—something like flunking the ‘cricket test’, an idea coined by a former Conservative government minister, Norman Tebbit.

You may recall the grumblings of the more chauvinistic sports journalists in the 1990s when the UK premier league started to recruit the best footballers from around the world.

Most people now agree that this influx helped raise the standards of the sport. That, in turn, boosted the fortunes of the English, Scottish and Welsh national teams. So why should the UK share market not turn its gaze outwards?

In fact, it has always done so.

According to economic historian Leslie Hannah[3], London has been a more global and a more open stock market than its competitors for over a century.  

“In 1900 more than four thousand companies traded in London, compared with only 200 on the New York Stock Exchange and around 800 in Berlin,” said Hannah. 

“In Germany and in America these companies were overwhelmingly domestic. In Britain the majority operated primarily overseas.”


1. Trade openness, 2019 (ourworldindata.org)

2. Source: FTSE Russell, as at September 30 2022.

2. “Pioneering Modern Corporate Governance: A View from London in 1900”, Leslie Hannah, June 2007

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