What are 'Kangaroos'

Kangaroos is a term used to describe Australian stocks that comprise the country’s All-Ordinaries Index. The index consists of stocks of the most actively traded Australian companies. 

BREAKING DOWN 'Kangaroos'

The Kangaroos is the All-Ordinaries Index, which represents the most quoted benchmark index for the country’s equities market. The Australian Stock Exchange is in charge of calculating and distributing the index and its returns.

The market-weighted All-Ordinaries Index, which launched in January 1980, is the oldest index in Australia and includes about 500 companies. The market capitalization of the companies included in the index represents a dominant share of the value of all shares listed on the Australian Stock Exchange.

For inclusion, All-Ordinaries Index companies have to have a market value of at least 0.2 percent of all domestic equities quoted on the exchange and have an average turnover of at least 0.5 percent of its quoted shares per month. Market values of those stocks meeting these criteria vary, so share price movements among larger-cap companies exert a greater influence on the index than smaller companies. Notably, the index does not include dividends paid to shareholders. As a result, the index does not reflect the total returns made from share market investments over any particular period

The Australian Stock Exchange updates the index portfolio at the end of every month to make sure that the companies remain eligible for inclusion. Changes in the portfolio companies, such as delistings, additions and capital reconstructions, can also lead to index changes during the month. 

Kangaroos in the Bond Market

Kangaroos can refer to Australia’s bond market as well. In this case, a kangaroo bond is a foreign bond issued in Australia’s market by a non-Australian firm but denominated in Australian dollars. The issuer’s goal would be to diversify their holdings and gain exposure to investors and lenders participating in Australia’s debt market. Among those that issue kangaroo bonds are corporations, financial institutions and governments. Historically, market participants from the U.S. and Germany have been significant issuers of kangaroo bonds.

Typically, the kangaroo bond sees increased issuance when interest rates in Australia are low relative to the foreign corporation's domestic rates, thus, lowering the foreign issuer's overall interest expense and cost of borrowing.

Similar in concept to kangaroo bonds, foreign bonds issued on other markets include the likes of Samurai bonds, Maple bonds, Matador bonds, Yankee bonds and Bulldog bonds.
 

RELATED TERMS
  1. Australian Stock Price Riskless ...

    Australian stock price riskless indexed note (ASPIRIN) is a zero ...
  2. Foreign Bond

    A foreign bond is a bond that is issued in a domestic market ...
  3. Samurai Bond

    A samurai bond is a yen-denominated bond issued in Tokyo by a ...
  4. Matador Bond

    A matador bond is a foreign bond issued in Spain by a company ...
  5. International Bond

    An international bond is a debt investment that is issued in ...
  6. Bond Market

    The bond market is the environment in which the issuance and ...
Related Articles
  1. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  2. Investing

    The Top 3 ETFs For Investing in Australia

    Learn about some of the best performing exchange-traded funds that investors use to obtain exposure to stock investments in Australia.
  3. Investing

    Why Bond Prices Fall When Interest Rates Rise

    Never invest in something you don’t understand. Bonds are no exception.
  4. Investing

    Investing in Bonds: 5 Mistakes to Avoid in Today's Market

    Investors need to understand the five mistakes involving interest rate risk, credit risk, complex bonds, markups and inflation to avoid in the bond market.
  5. Investing

    How Interest Rates Impact Bond Values

    The relationship between interest rates and bond prices can seem complicated. Here's how it works.
  6. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  7. Investing

    U.S. Corporate Bonds: The Last Safe Place to Make Money

    There aren't many other sources right now for relatively safe, steady income.
  8. Investing

    How Currency Risk Affects Foreign Bonds

    Foreign bond investors take advantage of higher interest rates diversifying their holdings. Learn about the increased risk from currency instability.
RELATED FAQS
  1. Which factors most influence fixed income securities?

    Learn about the main factors that impact the price of fixed income securities, and understand the various types of risk associated ... Read Answer >>
Trading Center