All Ordinaries

The All Ordinaries Index is the Australian equivalent of the Dow, the Nikkei Dow, or the FTSE-100. It is made up of the major stocks on the Australian Stock Exchange – both industrial and resource stocks. While the All Ords goes back many decades, the modern index was instituted on December 31, 1979 at a base of 500 points.

There are currently over 300 companies represented in the All Ordinaries Index portfolio. To be included a company must have a market value of at least 0.2% of all domestic equities quoted on the ASX and must maintain an average turnover on the ASX of at least 0.5% of its quoted shares per month. These companies currently comprise nearly 90% of total market valuation.

An up to date list of companies is available via the ASX website.

There are a diverse range of companies satisfying these criteria and their market values vary widely. This means that share price movements for companies with larger capitalisations have a larger effect on the All Ordinaries Index than do smaller companies.

The All Ordinaries Index portfolio is updated at the end of every month to ensure that the companies included continue to meet the criteria for inclusion. It is also updated throughout the month when there are changes in the portfolio companies including delistings, additions and capital reconstructions.

Recent examples of such changes are those caused by dividend reinvestment plans of Qantas Airways and the Commonwealth Bank and the share buy back scheme of the Westpac Banking Corporation. These changes affect the number of shares on issue for each of these companies and means that the index portfolio needs to be modified to maintain index consistency.

The Major Australian Stock Indexes

These are the five leading indexes on the Australian Stock Market. Between them, they provide a good “snapshot” of the present health of the market. The regular charts are updated three times a week, the long-term charts are updated weekly.

The indexes ranked in order of volatility are:

• The Fifty Leaders – least volatile
• The All Ordinaries
• The All Industrials
• The All Resources
• The Gold Index