Chapter 536: Creating a World-Class Stock Market Index

Xia Yu's question hit the core of the Financial Times Group's operations directly, and Clyde Albert had to respond seriously.

When managing the Financial Times Group, Clyde Albert's approach was to continuously improve the quality of articles. Therefore, he focused on expanding the submission targets, collaborating with economic and business experts from various universities, as well as elites in the financial industry.

The steadily increasing sales over the years had proven that this approach was correct.

In the past five years, the quality of *The Financial Times* articles had improved significantly, with in-depth analyses and high reading value. The positive reputation naturally grew, and the number of loyal readers increased.

So Clyde Albert presented his methods and thoughts candidly, then quietly waited for Xia Yu's evaluation.

Although he believed his approach was right, Xia Yu was now the boss, and the final decision was in his hands.

Xia Yu nodded with a smile, and before Clyde Albert could rejoice, Xia Yu shook his head with a smile, causing Clyde Albert's heart to sink slightly.

Xia Yu said in a clear voice, "Clyde, your methods and practices have had good results. If you continue this way, *The Financial Times* will likely maintain its position as the leading newspaper in its category. However, this also limits its potential and requires a lot of time!"

"I ask you, based on your approach, do you think *The Financial Times* can become a necessity for professionals in the financial industry? Can it create its own barriers to prevent other newspapers from surpassing it?"

After saying this, Xia Yu looked at him with interest, waiting for his answer.

Clyde Albert furrowed his brows, thought for a long time, and finally shook his head with a slightly troubled expression: "It cannot become a necessity and there is a possibility of being replaced."

Clyde Albert had a notable trait—he dared to face his own shortcomings. Because of this, he had been growing and improving his abilities.

After hearing Xia Yu's words, he analyzed it quietly and realized that it was indeed impossible to achieve what the boss had mentioned.

If the development continued according to his approach, it would heavily rely on submissions from various experts and scholars. If a newspaper paid a high price for exclusive content, *The Financial Times*'s advantage could be easily lost.

Without those high-quality submissions, the quality of *The Financial Times* would decline, and its reputation could collapse quickly.

So following his approach, there was still risk, and it placed the company's fate in others' hands, which was not wise. A media company needing stability couldn't operate this way!

However, with no other options, his approach was indeed a good measure to increase sales. It had both advantages and disadvantages!

"Therefore, *The Financial Times* must create an irreplaceable advantage to make it a necessity for financial industry professionals!"

Xia Yu said with a firm tone.

Clyde Albert trembled and felt the boss's determination, and was very curious about what advantage the boss was referring to.

"Boss, please guide me!"

Clyde Albert lowered his posture and earnestly asked for guidance.

"For example, creating an indispensable authoritative stock market index for the entire London stock market. We can call it the London Financial Times Index. As long as financial professionals and investors prioritize the London Financial Times Index for market research, the company will be invincible!"

Xia Yu's eyes narrowed as he spoke slowly.

"London Financial Times Index?"

Clyde Albert repeated, his brows furrowing.

If the London Financial Times Index could really be created, there was no doubt that *The Financial Times* would be unbeatable, and no other financial newspaper could surpass it.

However, there were already several financial indices in London. Apart from a few compiled by financial service institutions, only a few were compiled by newspapers, and their influence was limited.

Clyde Albert had considered creating a financial index before, but due to the immense difficulty and risk, he had only thought about it and had not actually implemented it, as he lacked confidence.

Creating a stock market index is not an easy task; it requires extensive research and analysis. The data is vast, and the research is complex, with constantly changing data. Therefore, this task requires significant manpower.

A stock market index, compiled by a stock exchange or financial service institution, indicates stock market movements and helps investors evaluate their investments and predict market trends.

In addition, the media, company executives, and even political leaders use it as a reference to observe and predict social, political, and economic developments.

The calculation methods for indices generally fall into three categories: relative method, composite method, and weighted method. Typically, the stock price during the reporting period is compared with a base period price, and the ratio is multiplied by the base period index value to determine the stock index for the reporting period.

Famous global stock market indices include the Dow Jones Index, the New York Stock Exchange Index, the S&P Index, and the Nikkei 225 Index, which evolved from the Dow Jones Index algorithm.

Of course, the Hang Seng Index, while famous in Hong Kong, is only modestly known worldwide due to the size of the Hong Kong stock market.

Unfortunately, due to various reasons, the three major European countries, the UK, France, and Germany, have not had a globally renowned index representing their stock markets. This presents an opportunity.

If *The Financial Times* can create such an index, its reputation would indeed spread worldwide, and its influence would be global.

What Clyde did not know was that *The Financial Times* had actually launched a stock market index in 1984—the well-known FTSE 100 Index, also known as the FTSE 100.

The FTSE 100 Index is a stock index of the 100 largest companies listed on the London Stock Exchange. This index serves as a barometer of the UK economy and is one of Europe's most important stock indices.

The FTSE 100 Index, along with the Frankfurt Index and France's CAC-40 Index, is considered one of the three major European stock indices and is a popular financial product among global investors. It has also become one of the most important indicators for observing European stock trends.

In addition to the FTSE 100 Index, *The Financial Times* also created the FTSE 250 Index and the FTSE 350 Index, which are similarly renowned, further enhancing *The Financial Times*'s authority and global reputation.

This is also the reason why, in later years, the Financial Times Group was acquired by Japan's Nikkei Group for €844 million.

Of course, Clyde Albert was unaware of these facts.

But Xia Yu was fully aware, so he planned to push for the index's early launch, which was still five years away!

By guiding the key points, *The Financial Times Group* only needed to recruit people to collect data and then calculate and compile the stock market index according to the methods he set. 

Using a stock market index perfected over decades would greatly boost *The Financial Times*, making its impact truly seismic.

Clyde Albert took a deep breath and said firmly, "Boss, rest assured. I will establish a project specifically for this and create a Stock Market Index Research Institute."

Although he said this, the pressure he felt was immense, and he alone knew how challenging it was. The costs, time, and results were all unknown!

Xia Yu nodded slightly and instructed, "There's no need to establish a new department. For better operation, set up a subsidiary called FTSE Index Ltd. Once the company is established, I will provide you with some materials. Follow that approach to create the stock market index."

"Understood!"

Clyde Albert felt puzzled and curious but did not ask further, as the materials were obviously not yet available.

...

In the following days, Xia Yu listed the companies that made up the FTSE 100 Index based on future knowledge.

In fact, finding the right approach to create a stock market index would significantly reduce the difficulty.

The FTSE 100 Index in the future selects the 100 largest companies in the UK stock market, covering companies from nine major European countries. It primarily focuses on UK companies and also includes enterprises from Germany, France, Italy, Finland, Switzerland, Sweden, the Netherlands, and Spain listed on the London Stock Exchange.

The components of the FTSE 100 Index are reviewed quarterly and replaced according to actual conditions.

In addition to the FTSE 100 Index, Xia Yu also wrote plans for the FTSE 250 Index and the FTSE 350 Index.

The FTSE 250 Index, besides the stocks covered by the FTSE 100 Index, includes the next largest 250 stocks.

The FTSE 350 Index covers all companies in the FTSE 100 Index and the FTSE 250 Index.

Of course, constructing the FTSE 250 Index and the FTSE 350 Index should follow after the FTSE 100 Index.

The most important task now was to create the FTSE 100 Index. This was the essence and the most authoritative and representative index.

The other two indices would be extensions of the FTSE 100 Index. Xia Yu intended to further expand its influence and coverage after the success of the FTSE 100 Index, creating a solid and broad moat for the company.

By getting ahead and taking the lead, they could secure their position more safely!

Besides outlining the selection criteria for companies, the planning also included various complex professional knowledge such as calculation methods for different indices, sampling methods, and modeling techniques.

Under normal circumstances, these would need to be explored through gradual practical analysis, but Xia Yu directly provided the results, saving several years of exploration time.

Indeed, after Xia Yu provided these guidelines to Clyde Albert, the latter was astonished, looking at Xia Yu as if he were a

 deity.

Following Xia Yu's guidance, they indeed created the globally renowned FTSE 100 Index. FTSE Index Ltd. also became a world-class index calculation financial institution, and *The Financial Times* gained global prominence.

Of course, that's a story for later.

In reality, after the conversation with Clyde Albert, Xia Yu went back to prepare for January 25th, the day of the British Chinese Chamber of Commerce gala!