A new broad-based index has been launched by ASX and S&P Dow Jones Indices to track the performance of Australia’s agribusiness sector.
The S&P/ASX Agribusiness Index (XAG) includes ASX-listed companies whose principal business activity is either in the primary production of agricultural products or in the production of commodities used as inputs into these products.
A total of 25 constituents with a market capitalisation of nearly $30 billion will make up the AgBiz Index at launch including Treasury Wine Estates, A2 Milk, Nufarm, Elders and Bega Cheese.
“The profile of the agribusiness sector is hampered by the absence of an index benchmark akin to mining, energy, banking, property, healthcare or technology,” said ASX head of strategic delivery, capital markets, Ken Chapman.
“By raising the profile of the sector, the AgBiz Index will increase investor understanding and interest, and be a critical ingredient in priming the market for the next phase of agricultural innovation.”
To be included in the index, companies must be among the largest 1,000 ASX-listed securities and meet minimum float-adjusted market cap, daily-traded value and liquidity thresholds.
ASX said the index would include 11 sub-industries in total such as brewers, packaged foods and meats, paper products, fertilisers and agricultural chemicals, distillers and vintners.
“By creating the AgBiz Index, ASX is supporting agribusinesses to grow and meet the Delivering Ag2030 goal of becoming a $100-billion industry by 2030,” said Mr Chapman.
“For many investors, the recent market volatility has highlighted the benefits of a diversified investment portfolio and of quality counter-cyclical stocks, such as those in the agribusiness sector.
The AgBiz index does not have a set number of constituents, which can change at each semi-annual rebalance along with their respective weights.
From this week, the index will be calculated on an end-of-day basis before commencing quotation as a real-time index from 1 July.
“We are honoured to collaborate with ASX and jointly bring this timely S&P/ASX Agribusiness Index to life, which aligns with the goal of the Australian Government to expand the agribusiness industry,” commented S&P Dow Jones Indices head of ESG and innovation, Reid Steadman.
“This innovative index reflects the market’s heightened awareness of the need for sustainable agriculture. It will also serve as a valuable tool for investors seeking to gain exposure to this vital driver of Australia’s economy.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
