The AUS200 – also called ASX 200 – refers to the benchmark investable stocks registered on the ASE (Australian Securities Exchange), which is the primary exchange for Australian stocks based in Sydney.
It was created in the year 2000 and consists of the 200 largest public organizations by market capitalization.
The ASX 200 or AUS 200 is the principal benchmark of the S&P/ASX group of indices, which is one of the indices issued by S&P Dow Jones on Australian markets. As with many other indices, the AUS200 carries out quarterly rebalances.
The index removes and adds firms that are no longer qualified or have qualified as AUS200 companies via previous six months’ data of each company.
How to invest in ASX 200 CFDs
Trading AUS200 Index CFDs are an excellent way to speculate on one of the world’s top financial markets and keep abreast of Australia’s top stock market. CFDs allow you to enter a larger trade size with a small margin to earn huge profits.
However, these are high-risk financial products and could lead to the loss of all your investments. You’d want to have a good strategy alongside a proper risk management profile for profitable trading.
All indices are benchmarks and cannot be purchased like stocks or commodities. The most popular way of trading indices is using a derivative financial instrument called a contract for difference, CFD.
Investing in ASX 200 CFDs is a relatively straightforward process. All you need to do is buy shares in any ASX 200 listed organization through a certified broker.
A contract for difference (CFD) is a contract between an investor and a broker to settle the differences in the underlying asset’s price movement.
How many companies are listed on the AUS200?
The number of listed companies on the AUS200 is highly dynamic and does not always slip back to 200. On average, as mentioned earlier, the index is rebalanced every quarter by Standard & Poor’s. However, as of January 25, 2020, the constituent stocks on the AUS200 are arranged alphabetically by their symbols. The top 10 companies include:
- The a2 Milk Company (Food, Beverage, and Tobacco)
- Adelaide Brighton (Materials)
- Abacus Property Group (Financials)
- AGL Energy Ltd (Utilities)
- Aristocrat Leisure (Consumer Discretionary)
- ALS Limited (Industrials)
- Altium Ltd (Information Technology)
- Atlas Arteria FP Ordinary Stapled Securities (Industrials)
- Amcor Ltd (Materials)
- AMP Ltd (Financials)
The Australian Stock Exchange
The Australian stock exchange was created in April 1987. In 2006, it consolidated with the Sydney Futures Exchange and became the Australian Securities Exchange— The prime securities exchange in Australia.
It is controlled by an Australian public company called the ASX Limited or better known as Australian Securities Exchange Ltd.
The exchange was formed via legislation that merged six regional stock exchanges.
The exchange is also a listed company under ‘ASX Group,’ its umbrella brand, while the listed company is ASX Limited. Today, it reckons with the top 10 of the world’s listed exchange groups and has over 2,000 listed companies.
The Australian Securities Exchange ensures the availability of transparent, high-quality, and timely market information, listing and clearing services, cash and derivatives trading, depository and settlement management facilities, as well as an infrastructure that fully supports tracking and compliance with enforced rules and regulations.
The ASX also acts as an overseer or regulator that oversees corporate governance in listed organizations.
The ASX is well-known for its technological sophistication as its trading technology encompasses two platforms:
- The ASX Trade, which is designed for domestic trades, is one of the most functionally complete and fastest multi-asset trading platforms globally as it delivers latency down to ~250 microseconds.
- The ‘ASX Trade24,’ on the other hand, facilitates global trades 24/7, maintaining two active trading days concurrently for seamless trading across multiple time zones. This platform boasts a network access points located at vital financial centers worldwide, including Melbourne, Sydney, Hong Kong, Singapore, London, New York, and Chicago.
The Australian Securities Exchange also utilizes robust clearing and settlement technologies. These are typically backed by collateral and sizable capital and offer funds and security of trades to market participants and regulatory supervision.
How Does a Company Qualify for the AUS200?
To qualify for inclusion in the AUS200, the company must satisfy the following three conditions:
- The stock must be listed as a preferred or ordinary stock on the Australian Securities Exchange.
- The stock’s float-adjusted market capitalization must meet the requirements of the index. In the AUS200, this typically implies that the company’s float-adjusted market capitalization must be among the most prominent 200 on the Australian stock exchange index. The market capitalization may not include the issuing of new shares or extensive strategic holdings.
- The stock must also meet liquidity requirements. In this context, liquidity refers to how often the stock is traded and what volume. This indicates how easily an investor can purchase or sell off the stock. The stock must have a particular liquidity level for the AUS200, though a small group of investors cannot dominate the liquidity.
Bear in mind that these three conditions are highly required for inclusion into the AUS200. Nevertheless, this does not imply that any existing AUS200 company that temporarily fails to meet these conditions will be ousted immediately from the Australian stock market index. The index is rebalanced every quarter.
How is the ASX 200 calculated?
The ASX 200 is capitalization-weighted, which implies that an organization’s contribution to the index is relative to its total market value. In essence, the share price is multiplied by the number of tradable shares.
The companies on the list are classified using their market capitalization, including only the largest 200 companies in the country.
The AUS 200 is a benchmark representing the largest 200 companies’ performance in Australia and its economic strength by float-adjusted market capitalization.
The index has found its way into the list of top 10 indices in global financial markets. Stocks included in the index undergo rigorous examinations to meet the eligibility criteria.
Trading the AUS or the ASX 200 on CFDs calls for discipline and strategic financial acumen.