The ASX, in partnership with S&P Dow Jones Indices, has launched the S&P/ASX Agribusiness (AgBiz) Index, including companies whose principal activity is the primary production of agricultural products or commodities used as inputs.
The AgBiz Index will feature 25 companies with a combined market capitalisation of nearly A$30 billion, including household names such as Treasury Wine Estates, A2 Milk, Nufarm, Elders and Bega Cheese.
It selects companies from the largest 1,000 ASX-listed securities and will include 11 sub-industries such as brewers, packaged foods and meats, distillers/vintners, agricultural products and pharmaceuticals.
According to the ASX website, medicinal cannabis companies who have appeared in the top 20 using historical data since 2015 include Cann Group, Little Green Pharma, Ecofibre, Creso Pharma, IDT Australia and MGC Pharma.
Head of strategic delivery, capital markets at the ASX Ken Chapman said the AgBiz Index sets a new benchmark for monitoring the performance of primary production companies and the 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,” he said.
“The combination of accelerating climate risks, booming consumer demand, increasing complexity in geopolitical relations and supply chains, and exponential advances in technology 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.”
Head of ESG and innovation, S&P Dow Jones Indices Reid Steadman added: “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.”
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 — they and their respective weights can change at each bi-annual rebalance in April and October.
From May 31, 2022, the index will initially be calculated on an end-of-day basis only. It will commence quotation as a real-time index on July 1.
Chapman added: “By creating the AgBiz Index, ASX is supporting agribusinesses to grow and meet the 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.”
Meanwhile, Business News Australia has ranked the country’s top 20 ASX-listed medicinal cannabis companies, with Incannex topping the list, followed by Cronos Australia, Ecofibre, Cann Group and Little Green Pharma. For the full list, click here.