New Industry Classification

New Industry Classification

Why Bahrain Bourse is Introducing a New Industry Classification Standard?

Bahrain Bourse’s earlier sector industry classification had been in place since the establishment of Bahrain Bourse in 1987. The decision to reclassify current industrial sectors aims to enhance transparency and provide more reliable information on sector performance that is aligned to international best practices. It also aims to establish alignment with global industrial standards for classifying listed companies as adopted by regional and international stock exchanges, which will provide better information to international investors on the performance of sectorial indices and enable easier sectorial comparability with global peers.

Advantages of Adopting Global Classification Standards

  • Benchmarking: Meeting the needs of the global investment community for a classification system that reflects a company's financial performance to that of the industry they represent, providing Asset Managers with better benchmarks for their funds.
  • Analysis: Cross-market analysis by industry/sector is made possible and seamless as the same classification systems are present regionally and globally, enabling investors and analysts to make comparisons based on company, sector and industry across different markets.
  • Alignment: Enhancing BHB’s image globally and strengthening its compliance with international standards.
  • Logical Grouping: Group sectors that have common correlations & risk exposure.
  • Investment Strategies: Assist in constructing consistently defined global or regional sector-based and sector rotation strategies.
  • Updates: Annual reviews to ensure listed companies are allocated as per their main business activity.

Global Industry Classification Standard (GICS)

The GICS is a global hierarchical industry classification standard developed by index providers MSCI and S&P Dow Jones Indices and  it is a four-tiered, hierarchical industry classification system.: 11 sectors, 24 industry groups, more than 60 industries, and more than 150 sub-industries.


The GICS structure is:

  • Universal: the standard applies to companies globally.
  • Reliable: the structure correctly reflects the current state of industries in the equity investment universe.
  • Flexible: the structure offers four levels of analysis, ranging from the most general sector to the most specialized sub-industry.
  • Evolving: annual reviews are conducted by S&P Dow Jones Indices and MSCI to ensure that the structure remains fully representative of today’s global markets.

GICS Structure and Methodology

To provide the level of precision critical in the investment process, the GICS is designed with four levels of  classifications that includes 11 Sectors, 24 Industry Groups, more than 60 Industries, and more than 150 Sub-Industries.

The way in which securities are classified into asset classes forms the basis of many important investment decisions. The relative merits of each security are judged primarily within these asset classes, and investment decisions are taken within this framework.

New Bahrain Bourse's Market Structure

Bahrain Bourse listed equities were previously classified into 6 sectors, however, the current market structure of Bahrain Bourse has 11 sectors (Sector Groups), representing first level under GICS hierarchical classification system. Companies under each of the 11 new sectors will be identified by their sub-sectors which is based on level 2 (Industry Group Level) of the GICS hierarchical classification system.






Bahrain Bourse’s sectoral and sub-sectoral distribution, are presented below. For further information on the classification of equities under the Global Industry Classification (GICS), kindly click here:

Level 1
Sector
Level 2
Industry Group
Energy
Materials
Industrials Capital Goods
Commercial & Professional Services
Transportation
Consumer Discretionary
Consumer Services
Retailing
Automobiles & Components
Consumer Durables & Apparel
Consumer Staples
Food & Staples Retailing
Food, Beverage & Tobacco
Household & Personal Products
Health Care
Financials
Banks
Insurance
Diversified Financials
Information Technology
Communications Services
Telecommunications Services
Media & Entertainment
Utilities
Real Estate
Real Estate Management & Development
Real Estate Investment Trusts (REITs)