In an aim to better meet the needs of global investors and ensure alignment with international best practices, Bahrain Bourse (BHB) has announced that it will adopt the Global Industry Classification Standard (GICS) for listed companies from Sunday 11 July 2021. The reclassification, as noted by Shaikh Khalifa bin Ebrahim Al-Khalifa, BHB CEO, is an important step in assisting investor decisions by offering "objectively defined investment categories to design and carry out efficient portfolio strategies".
What is GICS
The GICS structure, developed by Morgan Stanley Capital International (MSCI) and Standard & Poor (S&P) Dow Jones, consists of four levels: 11 Sectors, 24 Industry Groups, 69 Industries and 158 Sub-Industries into which S&P has categorised all major publicly listed companies. The BHB's classification focuses on level 1, Sectors, which classifies companies based on their principle business activity. Importantly, GICS provides a standardised system, which is used on a global scale, and which accurately reflects the current state of industries in global investment markets.
BHB Classification
As an initial step, a total of 41 companies currently listed on BHB will be re-classified into seven, out of eleven, sector groups, outlined below:
- Materials;
- Industrials covering Capital Goods, Commercial & Professional Services, and Transportation;
- Consumer Discretionary covering Consumer Services, Retailing, Automobiles & Components, and Consumer Durables Apparel;
- Consumer Staples covering Food & Staples Retailing, Food, Beverage & Tobacco, and Household & Personal Products;
- Financials covering Banks, Insurance, and Diversified Financials;
- Communications Services covering Telecommunication Services and Media & Entertainment; and
- Real Estate covering REITs, and Real Estate Management & Development.
The four remaining Sectors under GICS: Energy, Healthcare, Information Technology, and Utilities, are currently inactive however, they will be activated with immediate effect where relevant companies classifying to those sector groups are publicly listed.
In order to ensure relevant stakeholders remain informed on this initiative, BHB has launched various virtual workshops with the aim of raising awareness and ensuring a smooth transition for listed companies. This important step reflects BHB's commitment to providing transparency, reliability, and to align with internationally recognised standards.
