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
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:
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.