All-Ordinaries Stock Index

Demystifying the All-Ordinaries Stock Index: An In-Depth Look

The All-Ordinaries, colloquially known as the 'Kangaroos,' stands as a pivotal stock index representing the Australian equities market. Initiated in 1980, this index, maintained by the Australian Stock Exchange (ASX), encapsulates the performance of approximately 500 publicly traded companies. Let's delve into the nuances of the All-Ordinaries Index, its evolution, inclusion criteria, and its significance in the Australian financial landscape.

Unraveling the All-Ordinaries Stock Index

The All-Ordinaries Index, often referred to as the 'All Ords,' serves as a barometer for the Australian stock market, tracking the performance of around 500 prominent companies listed on the ASX. With its inception dating back to January 1980, the All-Ordinaries Index holds the distinction of being the oldest index in Australia.

The index is market-weighted, meaning that companies with larger market capitalizations exert greater influence on its movements. As of today, the combined market capitalization of the companies included in the All-Ordinaries Index accounts for over 95% of the total value of all shares listed on the ASX.

Evolution of the All-Ordinaries Index

Originally established with a base index of 500 points, the All-Ordinaries has undergone transformations over the years. In April 2000, the index underwent a restructuring to encompass the 500 largest companies by market capitalization, aligning it more closely with the evolving dynamics of the financial markets. This restructuring coincided with the introduction of other benchmark indices such as the S&P/ASX 200, which have since overshadowed the prominence of the All-Ordinaries Index to some extent.

Inclusion Criteria and Portfolio Maintenance

For a company to be included in the All-Ordinaries Index, it must meet specific criteria set forth by the ASX. These criteria mandate that a company must possess a market value of at least 0.2% of all domestic equities quoted on the ASX and maintain an average turnover of at least 0.5% of its quoted shares per month. The diverse range of companies satisfying these criteria contributes to the index's representation of various sectors within the Australian economy.

The index portfolio undergoes regular updates to ensure that included companies continue to meet the stipulated criteria. Changes in the portfolio, including delistings, additions, and capital reconstructions, are promptly reflected to maintain the index's accuracy and relevance.

Conclusion

In conclusion, the All-Ordinaries Stock Index remains a cornerstone of the Australian financial landscape, offering investors and analysts valuable insights into the performance of the Australian equities market. Despite the emergence of alternative benchmark indices, the All-Ordinaries continues to hold significance as a widely recognized measure of market performance.