A list of frequently asked Aussie investing questions and answers for newbie investors – on the ASX and in general.
When does the ASX close / open?
The ASX operates on weekdays (excluding certain public holidays), with standard trading hours between 10:00am & 4:00pm AEST.
What days is the ASX closed each year?
Closing days for the exchange are on the public holidays for the:
- New Year’s Day holiday
- Australia Day holiday
- Good Friday holiday
- Easter Monday holiday
- ANZAC Day holiday
- Queen’s Birthday holiday (in NSW, where the exchange is located – differs to some other states)
- Boxing Day holiday
- Christmas Day holiday
Note that if the actual day of the holiday (e.g 25th of December for Christmas) falls on a weekend, the holiday / day the exchange is closed will typically be one of the immediately-following weekdays.
Where is the ASX located?
The office of the ASX is located on Bridge Street in Sydney, NSW. As a result, it operates in respect of several Sydney/NSW public holidays.
Is the ASX open on weekends?
No, the ASX trades on weekdays only.
Why is the ASX down today?
Stocks go up, and stocks go down – the same applies to entire markets. The ASX has a tendency to be strongly influenced by the USA’s markets over the previous night, however this obviously varies.
Over the last 50+ years, the stock market has averaged about 54% “green” days, and 46% “red” days (based on the S&P500). So, you’ve got a little bit over a 50/50 chance on any given day of the market being up vs. down.
What is CHESS?
CHESS is a common acronym you’ll see when referring to brokers in Australia/for the ASX. It stands for Clearing House Electronic Subregister System, and essentially serves as a way to “associate” your shareholdings directly with your own personal information vs. the broker who is making the trade. You’ll be given an individual HIN (Holder Identification Number), which the shares are allocated to
It’s a fairly unique setup specific to Australia, designed to provide an extra layer of clarification/security should anything drastic happen to the broker in terms of them going out of business.
This is exceedingly rare, and it’s not to say without CHESS sponsorship you’d never be able to get your shares/money back; CHESS simply makes that process easier given your personal details are directly associated.
Bear in mind other countries such as the US have a ton of brokers which have operated for years without any kind of “CHESS-like” system, however it’s an extra peace of mind factor if that’s important to you.
What is a ‘Custodial Model’ broker?
Essentially, a “non-CHESS” broker in which the shares are held under the broker’s details rather than your own.
As mentioned above, it’s a common model in most countries outside of Australia, and not necessarily any “less trustworthy” than those that offer CHESS.
Pretty much any non-ASX broker you use to trade foreign shares will be a ‘Custodial Model’ broker by default.
What is a Share Registry?
Share registries are 3rd-party administration companies who work on behalf of public companies to handle communications to shareholders, your dividend reinvestment plan options, physical mail-outs, AGM meeting attendance, and all sorts of other humdrum details.
They’re the ones who send you all the physical mail spam on behalf of the ASX.
The main ones you’ll encounter within Australia are:
Note that you don’t choose which of these to deal with; they’re already contracted with the companies whose shares you’re buying, so if you buy a fair few different holdings over time you’ll likely end up dealing with each of them (and their deluge of snail-mail) at some point.
What is an ETF?
ETF stands for “Exchange Traded Fund” and is essentially a collection of stocks ‘grouped together’ by a fund manager designed to follow a specific index, theme, or strategy. The ETF provider then charges a management fee (which differs depending on the fund), which is built-in to the share price performance.
They serve as a way to buy into a bunch of different companies within a single stock, and can contain anything from the Top 200 ASX companies, to companies that meet certain “Ethical” standards, to Oil producers, to agriculture companies, and everything else in between.
We’ve compiled a table of the current full list of Australian ETFs here.
What is the best ETF on the ASX for me?
See our more detailed article on this topic here.
Which Australian broker app should I use?
See our more detailed article on this topic here.
What is a P/E ratio?
“P/E Ratio” stands for Price to Earnings Ratio, and refers to the current share price of the company vs. its most recently-reported earnings to the ASX. Therefore, the lower the P/E ratio is, the “cheaper” the share price is relative to how much the company earened.
Bear in mind that P/E Ratios are always backwards-looking and based on past earnings – and are not necessarily an indicator of how well-valued a stock is moving forward.
What is a Blue Chip stock?
The term ‘Blue Chip’ in stocks / shares terminology has become a bit of a catch-all term used to describe any company that has grown to be a major name, with a strong track record of performance, and with a reputation for quality.
There’s a tendency to think of Blue Chip companies as only those with massive market caps, however we’d argue that any mid-cap company that proves its worth and business model over the course of multiple years could be classified as ‘Blue Chip’ to an extent.
The phrase originated from Poker, where chips that are/were blue had the highest dollar value assigned to them.
Have an additional question you want to see answered here? Contact us and let us know.
