Speculating on the All Ordinaries Index 

The All Ordinaries Index (AOI) is the oldest index of shares in Australia. It is calculated based on the share prices for 500 of the largest companies listed on the Australian Securities Exchange (ASX). Only common shares are included in the index. 

Below, we will take a look at a few facts that are good to know if you are contemplating speculating on the All Ordinaries index. 

The All Ordinaries index is the most quoted benchmark for Australian equities and is commonly seen as a gauge of the overall Australian economy. The market capitalization of the 500 AOI companies accounts for over 95% of the total value of all shares listed on the ASX. 

Among traders, the All Ordinaries index is referred to as the “All Ords” or simply “the Kangaroos”. 

Important: The official 3-letter exchange ticker for the All Ordinaries index in Australia is XAO, not AOI.

Who is in charge?

It is the Australian Securities Exchange (ASX) that constructs, calculates and publish the index.

The ASX sets the inclusion requirements.

What kind of index is this?

• The All Ordinaries index is a market-weighted index. Share price movements for companies with larger capitalizations have a larger effect on the All Ordinaries Index than do smaller companies.
• The All Ordinaries index is not an accumulation index. (It does not include the value of any dividends paid to shareholders and therefore does not reflect the total returns made from share market investments during that period.)
• One of the requirements for being included is having a market value of at least 0.2 percent of all domestic equities quoted on the ASX. The company must also maintain an average monthly turnover on the ASX of at least 0.5 percent of its quoted shares.
• The All Ordinaries index is always updated at the end of every month, and the constituents are checked to make sure they still meet the inclusion criteria. The index can also be updated during the month when it is necessary because of changes pertaining to the constituents, e.g. delistings, additions and capital reconstructions.

History

• The All Ordinaries index was established in 1980 and is Australia’s oldest index of shares. When it was established, it had a base index of 500.
• On 3 April 2000, the All Ordinaries index was restructured to cover the 500 largest companies by market capitalization.
• The peak for the index before the dip caused by the impact of the Global Financial Crisis of 2007-2008 was 6873.20, attained on 31 October 2007. By 22 January 2008, it was down to 5,222.0 points; on 6 March 2009 it was at 3,111.7 points.
• On 13 February 2013, the index surpassed 5,000 points for the first time since the 2007-2008 Global Financial Crisis. On this day, it reached 5,010.30. It would then go on to surpass 6,000 points on 1 November 2017, reaching 6,005.50.
• For the first time ever, the index surpassed 7,000 points on 10 January 2020.

Other Australian indices

The Australian Securities Exchange (ASX) offers a range of indices that provide a measure of the performance of different segments of the Australian stock market. Some of the main indices provided by the ASX include the S&P/ASX 200, which is the most widely-followed index and consists of the 200 largest companies listed on the ASX by market capitalization; the S&P/ASX 50, which consists of the 50 largest companies by market capitalization; and the S&P/ASX 300, which consists of the 300 largest companies by market capitalization. The ASX also offers indices for specific sectors, such as the S&P/ASX 200 Energy index for companies in the energy sector, and the S&P/ASX 200 Financials index for companies in the financial sector.

The Australian Securities Exchange (ASX)

The Australian Securities Exchange (ASX) is the primary stock exchange in Australia. It is located in Sydney and offers a range of services, including listing and trading a diverse range of securities, such as stocks and bonds. It is also providing access to market data and other information. The ASX is one of the largest stock exchanges in the Asia-Pacific region and is an important hub for businesses looking to raise capital and investors looking to buy and sell securities. Trading on the ASX is regulated by the Australian Securities Investment Commission (ASIC).

The Australian Securities Investment Commission (ASIC)

The Australian Securities and Investments Commission (ASIC) is an independent Australian government body that acts as the country’s corporate regulator. It is responsible for regulating the conduct of financial services firms, including banks, insurers, and credit providers, and overseeing Australia’s securities and futures industry. The ASIC also enforces the law relating to financial services and the corporate sector. It has the power to take action against firms and individuals that engage in misconduct or breach the law. Its mission is to promote confidence in the financial system and protect consumers by ensuring that financial markets are fair, transparent, and efficient.

::::::::::::::::::::::::::::::::::::::::::::::