ASX has launched the S&P/ASX Agribusiness Index.

ASX, in partnership with S&P Dow Jones Indices (S&PDJI), this week launched the S&P/ASX Agribusiness Index (ASX: XAG).

The new broad-based index includes companies whose principal business activity is in the primary production of agricultural products or in the production of commodities used as inputs into primary production of agricultural products. The index fills a gap in the family of indices representing the diverse sectors on ASX.

Ken Chapman, Head of Strategic Delivery, Capital Markets at ASX, said that the Agribusiness (AgBiz) Index sets a new benchmark for monitoring the performance of primary production companies and the primary industry sector as a whole.

“The profile of the agribusiness sector is hampered by the absence of an index benchmark akin to mining, energy, banking, property, healthcare or technology,” Mr Chapman said.

“The combination of accelerating climate risks, booming consumer demand, increasing complexity in geopolitical relations and supply chains, and exponential advances in technology^[1] is driving demand for capital in all stages in the value chain.

“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.”

Reid Steadman, Head of ESG and Innovation, S&P Dow Jones Indices, said: “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.

“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.”

The AgBiz Index follows the S&P/ASX Australian Indices Methodology. At launch, it will have 25 constituents with a combined market capitalisation of close to $30 billion. It will include household names such as Treasury Wine Estates, A2 Milk, Nufarm, Elders and Bega Cheese.

The index selects companies from the largest 1,000 ASX-listed securities and will look beyond the Global Industry Classification Standard (GICS®) agricultural products sub-industry to include a total of 11 sub-industries such as brewers, packaged foods and meats, paper products, fertilisers and agricultural chemicals, distillers and vintners. The index then uses a list of keywords such as beverage, dairy and farm to identify eligible companies.

Eligibility for the index includes minimum float-adjusted market cap, daily traded value and liquidity thresholds. The index does not have a set number of constituents; its constituents and their respective weights can change at each semi-annual rebalance.

From 31 May 2022, the index will initially be calculated on an end-of-day basis only. It will commence quotation as a real-time index on 1 July 2022.

Mr Chapman continued: “ASX facilitates access to the fifth largest pool of pension funds globally and has a long history as an efficient capital raising venue. By creating the AgBiz Index, ASX is supporting agribusinesses to grow and meet the Delivering Ag20302 goal of becoming a $100 billion industry by 2030.

“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.”

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[1] Hatfield-Dodds, S, Hajkowicz, S, and Eady, S 2021, Stocktake of megatrends shaping Australian agriculture: 2021 update, Australian Bureau of Agricultural and Resources Economics and Sciences (ABARES), Canberra. CC BY 4.0.

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The launch of the S&P/ASX Australian Fixed Income Series will complement Australia’s official S&P/ASX Equity Index Series, providing a complete offering across the key asset classes of cash, fixed income and equities.

The S&P/ASX Australian Fixed Income Index Series is a broad benchmark suite of indices designed to measure the performance of the Australian short-term money market and the Australian bond market which meet the index eligibility criteria.
The S&P/ASX Australian Fixed Income Index Series comprises:

• The S&P/ASX Australian Fixed Interest Index – the flagship bond index, measuring the performance of the Australian bond market and the sub-sector indices
• The S&P/ASX Government Bond Index
• The S&P/ASX Commonwealth Government Bond Index
• The S&P/ASX State Government Bond Index
• The S&P/ASX Corporate Bond Index
• The S&P/ASX Supranational and Sovereign Bond Index
• The S&P/ASX Bank Bill Index – measuring the performance of the Australian short term money market.

The launch of the S&P/ASX Australian Fixed Income Index Series is a direct reflection of increased investor attraction to the fixed income asset class given the ongoing volatility in global markets. The launch is also a direct response to interest expressed by investment managers, investment product sponsors, managed and superannuation funds and professional advisors for an independent specialist index provider.

Guy Maguire, Head of S&P Indices in Australia, said that like the rest of the world, Australian advisors and investors are looking for access to a comprehensive range of asset class indices to enable them to better manage volatility.

“Australian investors need a comprehensive set of equity and fixed income measurement tools to benchmark the performance of investments. Like the S&P/ASX Equity Index Series, the S&P/ASX Fixed Income Index Series is transparent, liquid, investible and independent.”

“Working with financial institutions and investment groups in major markets across the globe, we are increasingly seeing the emphasis on fixed income growing as a vital asset class offering. With the launch of the S&P/ASX Fixed Income Index Series, S&P Indices is the first index provider to offer complete asset class coverage in Australia, providing investors with a deeper, more complete line-up of indices for benchmarking their portfolios.”

Ken Chapman, General Manager for Futures and Options at ASX said: “The development of the S&P/ASX Fixed Income Index Series underpins ASX’s determination to improve investor understanding of this critical asset class and to help develop fixed income assets and supporting infrastructure. The indices complement ASX’s central role in facilitating risk transfer through its bond futures contracts, which also enable capital formation and investment through ASX’s operation of the listed interest rate securities market.”

S&P Indices and the ASX have a long history in servicing both debt and equity markets, domestically and globally. The introduction of the S&P/ASX Australian Fixed Income Index Series complements the existing S&P/ASX Equity Index Series, where over 90 domestic equity indices have been created since 2000.

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