What Is The S&P/ ASX 200 Index?

S&P/ ASX 200 is a stock market index comprising of stocks listed on the Australian Stock Exchange or ASX. 80% of Australia’s equity market capitalization is covered by S&P/ ASX 200 index. It was created by Standard and Poor’s (S&P) and is maintained by them. The value of 200 of the biggest public companies is tracked by this benchmark index based on their market capitalization.

S&P/ ASX 200 index is utilized as a barometer to examine the growth and performance of the Australian economy. It is commonly given the symbol ASJO or XJO.

Highly liquid securities which are listed on ASX index are termed as Australian or domestic for index purpose.

What S&P/ ASX index 200 select companies?

The selection of the companies is done by the committee of S&P and ASX. ASX-listed companies are first ranked based on their market capitalization. Listed investment companies and ETFs are not included in the selection procedure. Those companies are selected that fulfill investment and volume benchmarks.

The process is carried out quarterly (four times a year). In case, a significant event takes place such as a merger or an acquisition, the process may be undertaken intra-quarterly. Prior to commencing the process, two days’ notice is issued in the open market.

What are the characteristics of the S&P/ ASX 200 index?

S&P/ ASX 200 index is significantly skewed towards the financial sector in comparison to the materials, industrials, and healthcare sectors.

The relatively lower number of companies, as compared to some other stocks, indicates that each company has a weight attached to it that is quite higher than the average.  

What information does S&P/ ASX provide?

As the investors sell or buy shares of a company included in the index, it would reflect in the movement of the index, that is, the index will either move up or move down. The index allows investors to track the movement of the shares of the included companies daily by examining the change in share prices or percentage change.

ASX 200 had a value of 3,133.3 when it began in 2000, which was equal to the value of most indexes.

What is meant by an increase or decrease in S&P/ ASX 200 by 1 point?

In the stock market, one point is equal to one dollar. Points are generally employed for defining a short-term like a day or a week.

Two different stocks can fall or rise by a similar point; however, percentage loss or gain can be different. Points can be used for both individual stock and equity indexes.

Therefore, when it is stated that a share has increased by one point, then it implies that the stock has gained one dollar.