Types of shares
The Australian Sharemarket offers a wide range of companies to invest in, with approximately 2,200 companies listed on the ASX. Some companies have a long and consistent history of paying dividends, or relatively consistent profit growth. While others may not have the track record, but may have the potential to provide good returns in the future.
To give order to the wide spectrum of companies listed on ASX, they can be categorised in a number of ways:
Industrial & Resources
The companies listed on ASX can be categorised across a broad industry divide, industrial and resources companies. This broad categorisation is most commonly used in the share price tables in the newspapers. Some companies listed on ASX are involved in the industrials and mining sectors, the most obviously example being BHP.
The Australian Resources sector is made up of the two streams of Minerals and Energy. In Minerals, we have explorers and producers involved in a whole range of minerals, which can be broadly classified as base metals, gold and precious metals, mineral sands, diamonds, iron ore and other steel related ores. In Energy we have oil and natural gas, steaming and coking coal, coal seam methane gas and uranium.
Some of the largest shares in the broader resources sector include:
- BHP Billiton Limited (BHP) - Materials
- Newcrest Mining Limited (NCM) - Materials
- Woodside Petroleum Limited (WPL) - Energy
- RIO Tinto Limited (RIO) - Materials
- Origin Energy Limited (ORG) - Energy
- Santos Limited (STO) - Energy
- Lihir Gold Limited (LGL) - Materials
You can search for companies by their GICS Industry groups.
The Australian Industrials sector is a mix of all other streams that don't fit into resources sector. We have a large banking and insurance sector, telecommunications companies, newspapers and media, gambling agencies, and airlines to name a few:
- Westpac Banking Corporation (WBC) - Financials
- Commonwealth Bank of Australia (CBA) - Financials
- Telstra Corporation Limited (TLS) - Telecommunication Services
- National Australia Bank Limited (NAB) - Financials
- Woolworths Limited (WOW) - Consumer Staples
- Australia and New Zealand Banking Group Limited (ANZ) - Financials
- QBE Insurance Group Limited (QBE) - Financials
You can learn more about market sectors by completing our Market Indices and Market Sectors course.
Large & Small Capitalisations
Companies can be ordered by their relative size, large capitalisations versus small capitalisations companies. Market capitalisation is calculated by multiplying a company’s share price by the number of shares it has on issue. This can be applied to work out the market value of one company or of the value of all companies listed on the exchange.
Industry Sectors (GICS)
The Global Industry Classification Standard (or GICS) is a method of grouping companies into Industry Sectors along the lines of their main business activities. GICS is a joint Standard and Poor’s/Morgan Stanley Capital International product aimed at standardising industry definitions.
The standard classification system has the advantage that it encourages foreign investors to look into local markets, as well as allowing local investors to look at the rest of the world and compare stocks via industry classification. GICS sectors give you a better picture of which area of the market is driving its performance.
Having used a sector index to identify general areas of good performance it is then possible to drill down to the actual companies that make up the index to identify those companies which are contributing to the good performance of that sector.
You can use the ASX website to search for companies by their GICS industry group.
The most commonly traded securities in Australia are ‘ordinary’ shares. Holders of ordinary shares are part-owners of a company and may receive payments in cash, called dividends, if the company trades profitably. You can also buy preference, contributing, and partly paid shares.
Trading partly paid securities
On 6 April 2009 ASX introduced a market rule requiring brokers to alert retail clients of the need to inform themselves of the rights and obligations associated with trading partly paid securities. The rule took effect from 1 May 2009. More information
Contributing (partly paid) shares - more information
- Shares issued without requiring full payment up-front. At a specified future date(s) shareholders are legally obliged to pay the scheduled call, unless the issuing company is a no liability company in which case shares can be forfeited instead.
- Usually identified by a five letter code (the company code plus a two letter suffix, generally CA-CZ (except CP)).
- Have equal voting rights as ordinary shares and dividends are usually paid on a pro-rata basis.
- Retail customers are required to sign a client agreement with their broker before first trading in these securities to acknowledge they understand the risks involved.