What Is AEX? Overview of the Amsterdam Stock Exchange Index
Learn how the Amsterdam Stock Exchange Index (AEX) is structured, calculated, and maintained, along with its connection to Euronext and market sectors.
The AEX Index is the leading stock market benchmark in the Netherlands, tracking the performance of the most prominent companies listed on the Amsterdam Stock Exchange. It serves as a key indicator for investors assessing the Dutch economy and broader European markets.
How Companies Are Chosen
The AEX Index reflects the most representative and actively traded companies on the Amsterdam Stock Exchange. Euronext, which oversees the index, selects companies based on market capitalization, trading activity, and compliance with listing standards.
Capitalization Criteria
Market capitalization is a primary factor in a company’s inclusion. It is calculated by multiplying the total number of outstanding shares by the current share price. Larger companies with higher market values are more likely to be selected. The index is reviewed annually, with adjustments made based on market value changes. Companies with increasing market capitalization may be added, while those experiencing declines can be removed.
The weighting of each stock is also based on market capitalization, giving larger companies more influence on index movements. To prevent any single company from dominating, a cap is applied to individual stocks, limiting their maximum weight to a predefined percentage.
Liquidity Criteria
A company’s stock must also demonstrate sufficient trading activity. Liquidity refers to how easily shares can be bought or sold without significantly affecting the price. Euronext evaluates this by analyzing daily trading volumes and turnover rates. Stocks that trade frequently with high transaction volumes are preferred to ensure the index reflects investor activity.
If a company’s shares are rarely traded, it may be excluded due to the difficulty investors would face in executing transactions at stable prices. Companies must consistently meet minimum liquidity thresholds to maintain their position.
Continual Eligibility
Once included, a company must continue meeting capitalization and liquidity requirements to retain its position. Regular assessments ensure firms still adhere to these standards. If a company’s market value declines significantly or its trading activity falls below the required level, it risks removal.
Corporate events such as mergers, acquisitions, or delistings also impact eligibility. If a company is acquired and ceases to trade independently, it will be removed, with a new candidate taking its place.
Calculation Approach
The AEX Index is calculated using a free-float market capitalization-weighted methodology, meaning only publicly available shares contribute to a company’s weighting. Restricted shares—such as those held by governments or company insiders—are excluded.
The index level is determined by dividing the total free-float market capitalization of all constituent stocks by a fixed divisor. This divisor is adjusted periodically to account for corporate actions like stock splits, rights issues, or dividend distributions, preventing artificial distortions in the index value.
Price changes in individual stocks directly impact the index, with larger companies exerting more influence due to their greater weighting. However, a capping mechanism ensures no single stock dominates.
Trading Session Details
The AEX Index follows the trading hours of Euronext Amsterdam, operating from 9:00 AM to 5:30 PM Central European Time (CET) on regular business days. Before the official opening, a pre-market phase allows investors to place orders, helping establish indicative prices.
During the day, continuous trading ensures buy and sell orders are matched in real-time, with prices adjusting dynamically. An electronic order book system enhances transparency by displaying bid and ask prices. Volatility controls, such as circuit breakers, temporarily halt trading if a stock or the index experiences sudden price swings beyond predefined thresholds.
As the session nears its close, the market enters an auction phase where final trades are executed at a single price based on accumulated orders. This closing auction determines the official settlement prices for index components, which are used for portfolio valuations and derivative contract settlements.
Relation to Euronext
The AEX Index is part of Euronext, the pan-European exchange group that also oversees major indices in France, Belgium, Portugal, and Ireland. Euronext’s centralized infrastructure allows for harmonized trading, clearing, and settlement processes, ensuring AEX-listed securities benefit from a broader pool of liquidity and a standardized regulatory framework.
As the index operates within Euronext’s broader ecosystem, it is influenced by the exchange’s regulatory policies and technological advancements. Euronext’s Optiq trading platform, introduced in 2018, enhances execution speeds and order-matching efficiency. Additionally, Euronext’s market surveillance mechanisms help detect irregularities such as insider trading or market manipulation.
Sector Allocations
The AEX Index includes companies from various industries, ensuring it reflects the broader Dutch economy rather than being overly reliant on any single sector. The composition evolves over time as industries grow or decline in prominence.
Financial services remain a significant component, with major Dutch banks and insurance firms influencing the index’s performance. The energy sector, traditionally led by multinational oil and gas companies, has seen a gradual transition toward renewable energy firms as sustainability concerns shape corporate strategies.
Technology firms, particularly those specializing in semiconductor manufacturing and digital services, have gained prominence, highlighting the Netherlands’ role as a hub for innovation. Consumer goods companies, including those in food production and retail, provide stability to the index, as demand for essential products tends to remain steady even during economic downturns.