The region's listed companies did not enjoy their strongest year in 2010. But there were some notable exceptions with smaller companies revealing some extraordinary growth. Vinay Bedi, divisional director of investment manager Brewin Dolphin in Newcastle, casts his eye over The Journal North Index and finds much cause for comfort.

THE Journal North Index endured a tough 2010 when compared with the major Stock Market Indices.

In the 12 months ending November 2010, the FTSE All Share Index increased in value by 10.6% and the FTSE 100 Index increased by 9.9%.

But, in fact, it is the smaller companies that have enjoyed the best price increases over the last 12 months, with the FTSE Small Cap Index having risen by an exceptional 18.2%.

Even though The Journal North Index has a high proportion of smaller companies, this aspect has not actually helped performance over the last 12 months. The overall Journal North Index actually fell by 2.7% in the 12 months ending November 2010.

Almost half of The Journal North Index consists of companies valued at less than £100m (14 in total) and 12 of these are actually valued at under £50m.

It remains the case that the index only enjoys the presence of one FTSE 100 stock, namely Newcastle-based software developer and retailer Sage Group. With a value at the end of November 2010 of almost £3.4bn, Sage Group is the largest stock that is officially based in the region.

The performance of the three largest stocks in the index was relatively quite strong.

Engineering and oil services giant Amec, which has more than 1,000 staff in the North East, led the way with a 35.9% increase and Sage followed with a very admirable 21% rise over the 12 months. GlaxoSmithKline, which has around 1,200 workers in County Durham and Cumbria, saw a 3.5% drop in its value.

With its strong worldwide business model operating within a relatively defensive sector, investors will not be too concerned.

But it does appear clear from our review of The Journal North Index that over the last 12 months the region has generally been badly hit by the credit crunch, debt crisis and recession.

Companies such as Southern Cross Healthcare (value down 83.8%), Eaga (value down 60%), Northern Bear (value down 54.5%) have all been affected by the spending clampdown whether public or private sector.

Indeed, our two large local builders, Barratt Developments and Bellway, also suffered significant value falls over the 12 months of 40.7% and 28.8% respectively. This reflects the tough trading environment many of our companies have been operating in during this severe economic downturn.

It may be argued that the region does not have enough exposure to the type of sectors that are and should continue to benefit from what is now a significantly changed world economic environment.

In particular, companies that target export markets and can take some advantage from weaker sterling have been able to enjoy a better year.

Many of the overseas economies, especially the Far East and emerging economies in South America and Asia have been performing stronger than the old core western economies.

Those able to take advantage of these new growth regions will undoubtedly see the eventual benefits reflected in their share price performances.