The ASX All Technology Index officially opened on Monday before falling four per cent in a tough trading day for the market.
Launched on Friday, the index tracks the performance of an initial 46 technology companies listed on the exchange.
Featuring companies with a combined market capitalisation of more than $100 billion at its inception, the All Technology Index is intended as a representation of Australia’s technology sector.
Max Cunningham, GM of Issuer Services at the ASX, said the new index has been a long-time coming.
“The technology sector has grown remarkably and Australia now has a vibrant ASX-listed tech environment with many well-known names,” Cunningham said.
“It now deserves an index of its own, which will enhance the profile and understanding of technology companies in Australia and provide more opportunities for investors.”
Included in the index’s top ten companies by market capitalisation are Xero, Computershare, Afterpay, REA Group, Altium, Carsales.com, WiseTech, Link ADministration Holdings, NextDC, and Appen.
The index will be re-balanced quarterly.
In order to be listed on the index, companies have to hold a minimum market capitalisation of $120 million with a minimum daily traded value of $120,000.
At the time of writing, accounting software company Xero has the largest market capitalisation ($12 billion) on the All-Technology index.
Compared to technology behemoths like Apple and Google (both of which are worth trillions of dollars), the ASX’s All-Technology index represents a much smaller sample of the world’s IT-related investor capital.
Broad sentiment around the ASX’s latest index is positive, however, with Xero’s CEO Steve Vamos saying it adds focus to the Australian tech industry and provides “more opportunity for investors and more opportunities for emerging businesses in the sector to gain access to capital”.
Wisetech CEO and founder, Richard White, agreed saying that the index will add confidence for emerging entrepreneurs.
“There is an ecosystem here that is starting to form and we need to push that ecosystem and get founders, entrepreneurs and investors, the government – everybody – involved in understanding how powerful and how important for the Australian economy that tech sector is going to be.”
Ringing the bell at the @ASX to launch the new All Technology Index, that goes live Monday. My ears are still ringing but I’m so excited about what this Index will do to keep the sector surging forward, to grow the economy & create more Aussie jobs! pic.twitter.com/iujncTJome— Karen Andrews MP (@karenandrewsmp) February 20, 2020
An excited Karen Andrews, Minister for Industry, Science and Technology, launched the All Technology Index on Friday by ringing the bell at the ASX.
Andrews said that Australia has to see more investment in local innovation if it is to become a leading digital economy.
“We need to see our traditional businesses use home-grown technology to transform and adapt, and we need to see more Australian businesses go global into new markets,” Andrews said.
“Technology businesses who list, invest, and base themselves in Australia will help drive our national competitiveness.
“And businesses like WiseTech, Appen, Afterpay, Altium and Xero show that tech companies can do more than exist in Australia. They can thrive.”
While the All-Technology Index can’t itself be traded, Australian fund manager Betashares has already announced it will offer an exchange traded fund (ETF) based on the index.