What exactly is the ASX 200, and how do you trade it?
ASX 200

The ASX 200 is a stock market index comprised of the top 200 Australian equities traded on the Australian Securities Exchange (ASX). The ASX 200 is an excellent place to begin investing in stocks for beginners since it provides exposure to some of Australia’s most successful firms while also providing enough diversification so long-term investors do not feel overly exposed to a single sector or industry.

What exactly is the S&P/ASX 200 index?

The S&P/ASX 200 is Australia’s top stock index and is frequently used as a benchmark against which the performance of individual stocks or funds is evaluated. The index is intended to follow the performance of the 200 biggest eligible equities listed on the Australian stock exchange, as measured by float-adjusted market capitalization.

By size, the index encompasses more than 80% of the Australian stock market. The S&P/ASX 200 debuted in April 2000 and is priced in Australian dollars (Australian Dollars).

How is the ASX 200 compiled, and how are firms chosen?

The ASX 200 is a float-adjusted market cap weighted index, which means that a company’s stake in the index is proportional to its entire market value.

A stock must fulfill various eligibility requirements in order to be considered for inclusion as an index constituent:

The stock must be listed on the Australian Securities Exchange (ASX).

Types of securities: Both common and equity preferred stocks are eligible, however only common stocks are eligible.

Convertible stocks, bonds, and warrants are not examples of hybrid goods.

Market capitalization: To be included in the ASX 200 index, a stock must be institutionally investable, therefore the market capitalisation is an important factor in stock selection.

Liquidity: The stock must be traded regularly, with liquidity assessed in relation to its peers.

The ASX 200 index is rebalanced on a regular basis to guarantee adequate market capitalization and liquidity. Rebalancing occurs on a quarterly basis in March, June, September, and December.

More miners move up the ASX 200 ranks - MiningNews.net

What are the trading hours ?

From 10:00 a.m. to 4:00 p.m. AEST, the cash equities market is open.

During Daylight Saving Time, the SPI 200 Index Futures and Options can be traded from 5:10 PM to 08:00 AM AEST and again from 09:50 AM to 04:30 PM AEST, then from 05:10 PM to 08:00 AM + from 09:50 AM to 04:30 PM AEST when the clocks change again in mid-March.

What industries are represented by the ASX 200?

The ASX 200 is primarily dominated by banks, as seen by the data below. The financial sector accounts for 31% of the total index, followed by Materials, Healthcare, and Consumer Discretionary firms. 186 of the 200 enterprises are based in Australia, with the remaining eight in New Zealand, four in the United States, and one in each of the United Kingdom and France.

ASX 200 sectors shown in a pie chart

What are the top ten ASX 200 companies?

Banks account for five of the top ten largest firms in the ASX 200 share market index. As we can see from the sector split above, the financial sector dominates the index, accounting for over a third of the total.

While the ASX 200 is a decent approach to diversify as compared to buying a few individual shares, investors should be aware of the restrictions and that further diversification (such as investing in other stock markets and/or fixed-income instruments) may be required.

ASX200 top 10 constituents

Share price

Since its inception, the ASX 200 index has had various downturns, the most prominent of which were the 2007-2009 slump (during the Great Financial Crisis) and the more recent March 2020 dip triggered by the coronavirus epidemic. The index immediately rebounded from the COVID setback and followed its American/European rivals to new highs.

AUS200 trading chart


What is the best way to trade the ASX 200?

Contracts for Difference (CFDs) are one way to trade the ASX 200 in a cost-effective and efficient manner. Brokers often provide a CFD based on the Cash Index (AUS200) as well as a CFD based on the underlying Futures contract (SPI200).

When you trade the index using CFDs, you may speculate on the underlying instrument’s (the ASX 200) direction without owning it or any of its members. You will be able to travel both long and short with the use of leverage.

This is especially important during a recession. Most investors want to avoid portfolio reshuffling since the fees may quickly build up and it is extremely difficult to predict the market accurately. As a result, instead of selling a substantial portion of your portfolio when a downturn is expected, you might utilize CFDs to bet on declining prices.

The Cash CFD (AUS200) or Futures CFD (SPI200) will be better suited for you depending on your trading style. If you just hold positions for a short amount of time, the AUS200 may be preferable due to its modest spreads. However, if you are a long-term trader, you may choose the SPI200 because there are no swap costs.

What is the best way to invest in the ASX 200?

ETFs (Exchange Traded Funds) are the most convenient way to invest in the ASX 200 index. It is less expensive than purchasing individual shares, and it is rebalanced quarterly.

While ETFs can also be leveraged, they often provide less flexibility than trading CFDs. However, if you are a long-term investor who does not want to actively trade the product, the ETF may be an economical alternative.

There are several ETFs available from various suppliers. When selecting an ETF, you should read the factsheet given by your broker and become acquainted with the product’s features as well as the fees associated.

Aussie stock market suffers $200 billion loss in second-worst week ever

What causes the ASX 200 to move?

As investors trade the component shares, the index will rise and fall. Large price swings in shares with a higher weighting in the index will result in bigger variations in the index’s value.

Companies with a lesser market cap, on the other hand, will have little effect on the index’s price movement.

The following are the primary drivers of the ASX 200 price movement:

Economic statistics from Australia will have an impact on the domestic stock market. Depending on the nature of the data, some firms will be impacted more than others, while others would be impacted less or not at all. Rising interest rates, for example, would almost certainly have an impact on bank stock prices.

Earnings – Quarterly and yearly results, predictions, and corporate news may all have an impact on a business’s share price, and hence the value of the ASX 200. Because the index is dominated by a limited set of firms and two industries in particular (Finance and Materials), it is important to pay close attention to their outcomes.

Currency fluctuations – Significant changes in the value of the Australian dollar can have an impact on the price of the ASX 200. A strong AUD may make things more difficult for exporters, pushing down their share price.

Commodity pricing – Australia is a major commodities exporter, and the fluctuations in the global commodities market will have a significant impact on those enterprises. A rise in commodity prices boosts the share price of mining businesses, whereas a fall in commodity prices depresses the share price of such companies.

What is the average return ?

Over a 10-year period, the S&P/ASX 200 had an average total return of 9.3 percent each year, according to S&P Dow Jones Indices.

What does the performance tell us?

The ASX 200 experienced its ups and downs, but the average return makes the index considerably more appealing than bonds or bank cash. It all boils down to your risk tolerance.

For example, risk-averse investors may feel uneasy with stock market volatility. However, dollar-cost averaging is a strategy that can assist (DCA). This is an investing strategy in which investors split the entire amount to be invested over a set length of time. For example, instead of investing $100,000 in the stock market today, you may spread it out over 12 months (spending A$8333 every month). While DCA may result in reduced long-term profits, some investors who are hesitant to deposit a huge lump sum prefer it.

Regardless, the ASX 200 is a good instrument for measuring the overall performance of the Australian stock market because it accounts for more than 80% of Australia’s stock market capitalization and is routinely rebalanced.

List of ASX 200 companies

Ticker Company Name
AGL AGL Energy Ltd
ANZ Australia and New Zealand Banking Group Ltd
ARB ARB Corporation Ltd
ABP Abacus Property Group
ABC Adbri Ltd
APT Afterpay Ltd
ALQ Als Ltd
ALU Altium Ltd
AWC Alumina Ltd
AMC Amcor Plc
ALD Ampol Ltd
ANN Ansell Ltd
ARG Argo Investments Ltd
ALL Aristocrat Leisure Ltd
ALX Atlas Arteria
AIA Auckland International Airport Ltd
AZJ Aurizon Holdings Ltd
AST Ausnet Services Ltd
AFI Australian Foundation Investment Company Ltd
BHP BHP Group Ltd
BFL BSP Financial Group Ltd
BOQ Bank of Queensland Ltd
BAP Bapcor Ltd
BPT Beach Energy Ltd
BEN Bendigo and Adelaide Bank Ltd
AAA Betashares Australian High Interest Cash ETF
NDQ Betashares Nasdaq 100 ETF
BSL Bluescope Steel Ltd
BLD Boral Ltd
BXB Brambles Ltd
BRG Breville Group Ltd
BKW Brickworks Ltd
CLW Charter Hall Long Wale REIT
CAR Carsales.com Ltd
CNI Centuria Capital Group
CIP Centuria Industrial REIT
CHN Chalice Mining Ltd
CGF Challenger Ltd
CIA Champion Iron Ltd
CHC Charter Hall Group
CQR Charter Hall Retail REIT
CNU Chorus Ltd
CIM Cimic Group Ltd
CWY Cleanaway Waste Management Ltd
CUV Clinuvel Pharmaceuticals Ltd
COH Cochlear Ltd
CDA Codan Ltd
COL Coles Group Ltd
CBA Commonwealth Bank of Australia
CPU Computershare Ltd
CRN Coronado Global Resources Inc  
CTD Corporate Travel Management Ltd
CMW Cromwell Property Group
CWN Crown Resorts Ltd
DXS Dexus
DDR Dicker Data Ltd
DHG Domain Holdings Australia Ltd
DMP Domino’s PIZZA Enterprises Ltd
DOW Downer Edi Ltd
APE Eagers Automotive Ltd
EBO Ebos Group Ltd
EDV Endeavour Group Ltd
EVT Event Hospitality and Entertainment Ltd
EVN Evolution Mining Ltd
FPH Fisher & Paykel Healthcare Corporation Ltd
FBU Fletcher Building Ltd
FLT Flight Centre Travel Group Ltd
FMG Fortescue Metals Group Ltd
GNE Genesis Energy Ltd
GMG Goodman Group
GOZ Growthpoint Properties Australia
HVN Harvey Norman Holdings Ltd
HLS Healius Ltd
HMC Home Consortium
IFL IOOF Holdings Ltd
IEL Idp Education Ltd
ILU Iluka Resources Ltd
IMU Imugene Ltd
IPL Incitec Pivot Ltd
IFT Infratil Ltd
INA Ingenia Communities Group
IAG Insurance Australia Group Ltd
IRE Iress Ltd
IOZ Ishares Core S&P/ASX 200 ETF
IOO Ishares Global 100 ETF
IVV Ishares S&P 500 ETF
JBH JB Hi-Fi Ltd
JHX James Hardie Industries Plc
LFS Latitude Group Holdings Ltd
LLC Lendlease Group
LFG Liberty Financial Group
LIC Lifestyle Communities Ltd
LNK Link Administration Holdings Ltd
LTR Liontown Resources Ltd
LYC Lynas Rare EARTHS Ltd
MQG Macquarie Group Ltd
MFG Magellan Financial Group Ltd
MGOC Magellan Global Fund (Open Class) (Managed Fund)
MGF Magellan Global Fund
MPL Medibank Private Ltd
MP1 Megaport Ltd
MCY Mercury NZ Ltd
MEZ Meridian Energy Ltd  
MTS Metcash Ltd
MLT Milton Corporation Ltd
MIN Mineral Resources Ltd
MGR Mirvac Group
NAB National Australia Bank Ltd
NSR National Storage REIT
NWL Netwealth Group Ltd
NHC New Hope Corporation Ltd
NCM Newcrest Mining Ltd
NHF Nib Holdings Ltd
NIC Nickel Mines Ltd  
NEC Nine Entertainment Co. Holdings Ltd
NST Northern Star Resources Ltd
NVX Novonix Ltd
OZL OZ Minerals Ltd
OSH Oil Search Ltd
ORI Orica Ltd
ORG Origin Energy Ltd
ORE Orocobre Ltd
ORA Orora Ltd
PDL Pendal Group Ltd
PXA Pexa Group Ltd
PLS Pilbara Minerals Ltd
PNI Pinnacle Investment Management Group Ltd
PBH Pointsbet Holdings Ltd
PMV Premier Investments Ltd
PME Pro Medicus Ltd
QBE QBE Insurance Group Ltd
QUB QUBE Holdings Ltd
QAN Qantas Airways Ltd
REA REA Group Ltd
RIO RIO Tinto Ltd
RHC Ramsay Health Care Ltd
REH Reece Ltd
RWC Reliance Worldwide Corporation Ltd
RMD Resmed Inc
S32 SOUTH32 Ltd
SYD Sydney Airport
STO Santos Ltd
SCP Shopping Centres Australasia Property Group
SCG Scentre Group
SEK Seek Ltd
SVW Seven Group Holdings Ltd
SGM Sims Ltd
SKC Skycity Entertainment Group Ltd
SHL Sonic Healthcare Ltd
SOL Washington H Soul Pattinson & Company Ltd
SKI Spark Infrastructure Group
SPK Spark New Zealand Ltd
SDF Steadfast Group Ltd
SGP Stockland
SNZ Summerset Group Holdings Ltd
SUN Suncorp Group Ltd
SUL Super Retail Group Ltd
TPG TPG Telecom Ltd
TAH Tabcorp Holdings Ltd
TNE Technology One Ltd
TLS Telstra Corporation Ltd
SGR The Star Entertainment Group Ltd
A2M The a2 Milk Company Ltd
TCL Transurban Group
TWE Treasury Wine Estates Ltd
UWL Uniti Group Ltd
QUAL Vaneck MSCI International Quality ETF
VEU Vanguard All-World Ex-US Shares INDEX ETF
VAP Vanguard Australian Property Securities INDEX ETF
VAS Vanguard Australian Shares INDEX ETF
VGS Vanguard MSCI INDEX International Shares ETF
VTS Vanguard US Total Market Shares INDEX ETF
VCX Vicinity Centres
VUK Virgin Money Uk Plc
VEA Viva Energy Group Ltd
WAM WAM Capital Ltd
WPR Waypoint REIT
WEB Webjet Ltd
WES Wesfarmers Ltd
WBC Westpac Banking Corporation
WHC Whitehaven Coal Ltd
WTC Wisetech Global Ltd
WPL Woodside Petroleum Ltd
WOW Woolworths Group Ltd
WOR Worley Ltd
XRO Xero Ltd
YAL Yancoal Australia Ltd
Z1P ZIP Co Ltd
ZIM Zimplats Holdings Ltd

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.58% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.