Asset formula

The S&P/ASX index to track Australian agribusiness

The S&P Dow Jones Indices (S&P DJI) and the Australian Securities Exchange (ASX) have launched an index that measures performance trends in Australia’s growing agribusiness industry.

The S&P/ASX Agribusiness Index is a broad representation of the country’s agribusiness sector and tracks the performance of ASX-listed companies that are directly engaged in or benefit from agriculture-related activities, S&P DJI says.

The index selects components from the 1,000 largest stocks listed on the ASX and applies a liquidity screening process. In addition to agricultural products, it selects companies from the other 10 Global Industry Classification Standard (GICS) subsectors, such as fertilizers and agricultural chemicals, paper products, food distributors, brewers, distillers and winemakers, and packaged foods and meats. A list of keywords such as beverages, beers and dairy products is also used to identify eligible businesses through their business activity descriptions.

Due to global population growth, climate change and geopolitical risks, the demand for food and other agricultural products has increased significantly around the world, providing opportunities for exporters of high-quality products, according to the supplier of l ‘index. Australia is a major producer of many agricultural products, including wheat, wool and beef, and the country currently exports around 70% of its agricultural products. Agricultural products accounted for 12% of Australia’s total exports from 2020 to 2021.

To support the continued expansion of the agriculture sector and help build resilience in the face of global challenges, the Australian government has introduced the Delivering Ag2030 plan which lays the foundation for the country’s agriculture sector to grow to $100 billion. 2030.

The S&P/ASX Agribusiness Index is free float-adjusted market capitalization weighted, subject to a 10% cap of individual stocks, and is rebalanced semi-annually in May and November. The real-time calculation of the index will start on July 1.

During the 2020 Covid-19 market sell-off (February-March), the S&P/ASX Agribusiness Index led the S&P/ASX 200 by 18.7% based on historical data, demonstrating the resilience of the sector, according to S&P DJI.


“By raising the profile of the sector, the index will increase investor understanding and interest and be a critical ingredient in preparing the market for the next phase of agricultural innovation,” said Ken Chapman, Head of Strategic Delivery. , capital markets, at ASX. “For many investors, recent market volatility has highlighted the benefits of a diversified investment portfolio and quality countercyclical stocks, such as those in the agribusiness sector.”

Source link