The ASX 200 has become the main benchmark for tracking Australian stock values since its launch in April 2000. This shift from the All Ordinaries index reflects a preference for a more focused measure of market performance.

The ASX 200 captures nearly 94% of the market value represented by the All Ordinaries, which includes around 500 stocks. While the All Ordinaries index holds historical significance, it only accounts for the largest quarter of the ASX by market capitalization, leaving out many smaller companies that typically see minimal trading activity.

The advantages of the ASX 200 include:

• A clearer view of daily market fluctuations.
• A more dependable indicator for investors.
• A precise representation of trends within the Australian stock market.

Many smaller stocks, often referred to as “penny dreadfuls,” lack the liquidity and cash flow necessary to significantly influence broader market evaluations. This concentration on the top 200 companies enhances the reliability of market assessments.

📎 Related coverage from: net.au