Motley Fool Australia

Here’s how the ASX 200 compares to other global indices

comparing asx 200 to global indexes represented by woman holding up multiple countries' flags
Image source: Getty Images

Walking hand in hand with almost every country with a stock exchange is an accompanying index. An index is how investors can rank companies on stock exchanges according to their size. Indices are very useful for gauging the overall performance of the share market, as opposed to the individual shares that they consist of. In recent years, this has gained a new level of importance given the rise of index exchange-traded funds (ETFs) that have become one of the most popular avenues for investing in shares.

So in Australia, our stock exchange is typically represented by the S&P/ASX 200 Index (ASX: XJO), which holds 200 of the largest companies listed on the ASX. The ASX 200 ranks these 200 shares by market capitalisation, so the largest companies have the most weight in the index. That’s why an ASX 200 index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) will (at the time of writing) have 7.82% of its funds in CSL Limited (ASX: CSL), but only 0.06% of the fund in Bega Cheese Ltd (ASX: BGA) shares.

So how does the ASX 200 compare to other countries’ indices? The ASX is often criticised for being ‘heavy’ in bank and mining shares, so let’s see how it stacks up.

ASX 200 in the spotlight

The top 10 shares in the ASX 200 are as follows:

  1. CSL Limited (ASX: CSL) with a 7.82% weighting
  2. Commonwealth Bank of Australia (ASX: CBA) with a 7.22% weighting
  3. BHP Group Ltd (ASX: BHP) with a 5.99% weighting
  4. National Australia Bank Ltd (ASX: NAB) with a 3.91% weighting
  5. Westpac Banking Corp (ASX: WBC) with a 3.7% weighting
  6. Australia and New Zealand Banking Group Ltd (ASX: ANZ) with a 3.26% weighting
  7. Wesfarmers Ltd (ASX: WES) with a 3.09% weighting
  8. Woolworths Group Ltd (ASX: WOW) with a 2.7% weighting
  9. Macquarie Group Ltd (ASX: MQG) with a 2.67% weighting
  10. Transurban Group (ASX: TCL) with a 2.35% weighting

So straight off the bat, we can see that ASX bank shares make up a huge proportion of the ASX 200, with 5 out of the top 10 being banks. Mining companies, not so much. BHP is there at number 3, but it’s the only ASX resources share in this list. It’s worth noting though, that there are 4 ASX resources shares in the following 10 stocks in the ASX 200.

So how does this list compare with other exchanges around the world?

Over to the USA

Well, here’s a list of the top 10 companies in the United States S&P 500 Index (SP: .INX), the most popular index covering American shares.

  1. Apple Inc (NASDAQ: AAPL)
  2. Microsoft Corporation (NASDAQ: MSFT)
  3. Amazon.com Inc (NASDAQ: AMZN)
  4. Facebook Inc (NASDAQ: FB)
  5. Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
  6. Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B)
  7. Johnson & Johnson (NYSE: JNJ)
  8. Procter & Gamble Co (NYSE: PG)
  9. Visa Inc (NYSE: V)
  10. JPMorgan Chase & Co (NYSE: JPM)

Only one bank, and no miners! Very different, as you can see. In the US, it’s big tech that dominates, rather than banks or miners (although Berkshire owns a large number of banking stocks). The first 5 stocks on this list are all massive tech companies.

Oh, Canada!

Let’s now have a look at Canada and the top 10 stocks on the S&P/TSX 60 Index (TSI: TX60), the index covering the top 60 companies on Canada’s TSX (Toronto Stock Exchange):

  1. Royal Bank of Canada (TSE: RY)
  2. Shopify Inc (TSE: SHOP)
  3. Toronto-Dominion Bank (TSE: TD)
  4. Canadian National Railway (TSE: CNR)
  5. Bank of Nova Scotia (TSE: BNS)
  6. Enbridge Inc (TSE: ENB)
  7. Brookfield Asset Management Inc (TSE: BAM.A)(TSE: BAM.B)
  8. Barrick Gold Corp (TSE: ABX)
  9. Canadian Pacific Railway Ltd (TSE: CP)
  10. Bank of Montreal (TSE: BMO)

Now that looks more like the ASX. Four banks and one miner! Interestingly, e-commerce wunderkind, Shopify, is also present, as well as two railway companies, which don’t have nearly the same presence on our own ASX.

London calling

Finally, let’s have a look at the top 10 stocks in the FTSE 100 Index (FTSE: UKX), the index that tracks the largest 100 companies on the United Kingdom’s London Stock Exchange:

  1. AstraZeneca plc (LON: AZN)
  2. HSBC Holdings plc (LON: HSBA)
  3. GlaxoSmithKline plc (LON: GSK)
  4. Diageo plc (LON: DGE)
  5. British American Tobacco plc (LON: BATS)
  6. Unilever plc (LON: ULVR)
  7. Rio Tinto plc (LON: RIO)
  8. Royal Dutch Shell plc (LON: RDSA)(LON: RDSB)
  9. BP plc (LON: BP)
  10. Reckitt Benckiser Group plc (LON: RB)

Another interesting grab bag. AstraZeneca and GlaxoSmithKline are pharma giants, with the former now famous for its coronavirus vaccine candidate, incidentally. HSBC is a bank, whereas Diageo and British American Tobacco are ‘sin stocks’ (something we don’t really see on the ASX). Unilever and Reckitt Benckiser are consumer staples giants, whereas Rio Tinto (yes, the very same), BP and Royal Dutch Shell are all mining/oil companies.

Foolish takeaway

From this analysis, we can see that the ASX 200 has far more in common with both the TSX 60 and the FTSE 100 that the American S&P 500 today. However, saying that, all four exchanges are unique in their own way, and compliment and contrast to the ASX 200 as such.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Johnson & Johnson, JPMorgan Chase, National Australia Bank Limited, Procter & Gamble, and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Facebook, Microsoft, and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Diageo, GlaxoSmithKline, HSBC Holdings, Johnson & Johnson, and Unilever and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles…