What is the Amsterdam Stock Exchange (AEX/.AS)?
Brief answer
The Amsterdam Stock Exchange is the market in Amsterdam where shares of Dutch and international companies trade. Its blue‑chip benchmark index is the AEX (Amsterdam Exchange), a market‑capitalization‑weighted index of the most frequently traded Dutch companies on Euronext Amsterdam.
Definitions
– Amsterdam Stock Exchange: the trading venue in Amsterdam that evolved into what is now Euronext Amsterdam. Often referred to historically as the oldest continuously operating stock exchange (originating with the Dutch East India Company in the early 1600s).
– AEX index: a blue‑chip equity index made up of the most frequently traded Dutch companies on Euronext Amsterdam. It is used as a national benchmark.
– Market‑capitalization‑weighted index: an index where each constituent’s weight equals its market value (share price × shares outstanding) divided by the total market value of all constituents. Larger companies therefore have larger index weights.
Short historical summary
– 1602: The Amsterdam market emerged alongside the Dutch East India Company (VOC), one of the first joint‑stock enterprises that issued tradable shares.
– Late 20th century: The modern AEX name and structure appeared after a 1997 merger with the European Options Exchange (EOE).
– 2000: The Amsterdam exchange became part of Euronext following a merger with the Brussels and Paris exchanges.
– 2014: Euronext became independent again after a period under the NYSE Euronext group.
– Today: Euronext Amsterdam operates the AEX index as one of its main national benchmarks.
What the AEX covers (index family)
– AEX: the blue‑chip index (more than 20 of the most frequently traded Dutch stocks; examples include Unilever, ING Group, Philips, Royal Dutch Shell).
– AMX: mid‑cap index for medium‑sized Dutch companies.
– AScX: small‑cap index for smaller Dutch companies.
How the AEX is maintained
– Reviews: The index undergoes a full review in March and interim reviews in June, September, and December. Implemented changes take effect on the third Friday of the relevant month.
– Weighting rules: The AEX is market‑cap weighted. Initial weights for an index review are capped at 15% for any single company. Index weights are calculated using closing prices on March 1 (for the annual review). After quarterly adjustments, weights are kept as close as possible to the previous day’s levels and are not re‑capped at that moment.
Key takeaways (short)
– The Amsterdam exchange has roots in 1602 and is widely regarded as the oldest functioning stock exchange.
– The AEX is the primary Dutch blue‑chip index and is part of Euronext’s family of indices.
– The AEX uses market‑cap weighting with an initial 15% cap on any single company at review time.
– Index composition is reviewed quarterly, with major adjustments decided in March.
Practical checklist (if you are studying or using the AEX)
– Confirm whether you are looking at the AEX (blue‑chip) vs. AMX (mid‑cap) or AScX (small‑cap).
– Check the most recent index composition and which constituents are included.
– Note the index review schedule (March full review; June, September, December interim reviews) and the effective third‑Friday implementation.
– Remember the 15% initial cap rule when estimating single‑stock influence.
– Verify the date used for market‑cap calculations (closing prices on March 1 for the annual review).
– If modelling index returns, include dividend adjustments and corporate actions (not covered here; check official index documentation).
Worked numeric example (simplified illustration of the 15% cap rule)
Assumptions (simplified for illustration):
– We have 11 companies in an index universe.
– Market capitalizations (billions): Company A = 30; Companies B–K = 7 each. Total market cap = 30 + 10×7 = 100 billion.
– Raw market‑cap weights before any cap:
– A = 30/100 = 30%
– Each of B–K = 7/100 = 7% each
– Apply the 15% initial cap to A (as the largest company): set A = 15%.
– Remaining index weight to allocate = 100% − 15% = 85%.
– Sum of uncapped companies’ market caps = 70 (B–K).
– Redistribute the 85% proportionally to B–K by their market caps:
– Each of B–K: (7 / 70) × 85% = 0.1 × 85% = 8.5% each.
– Final simplified weights:
– A = 15%
– B–K = 8.5% each (10 × 8.5% = 85%)
Notes and caveats: This is a simplified redistribution to show the capping concept. Actual index providers may use iterative procedures or different technical rules to ensure no other constituent breaches the cap during redistribution and to meet liquidity or free‑float requirements.
Sources and further reading
– Investopedia — AEX: https://www.investopedia.com/terms/a/aex.asp
– Euronext (official site): https://www.euronext.com/en
– Encyclopaedia Britannica — Amsterdam Stock Exchange: https://www.britannica.com/topic/Amsterdam-Stock-Exchange
Educational disclaimer
This explainer is for educational purposes only. It does not constitute personalized investment advice, recommendations, or price forecasts. Always consult official index documentation and consider professional guidance before making trading or investment decisions.