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Bahrain Bourse to adopt Global Industrial Classification Standard (GICS) for listed companies

March 2, 2021
finance & economy

In line with Bahrain Bourse’s strategy to enhance transparency and efficiency in Bahrain’s capital market and to meet best international practices, Bahrain Bourse announces its plans to adopt the Global Industry Classification Standard (GICS) for listed companies effective 11th July 2021.

On this occasion, Chief Executive Officer of Bahrain Bourse, Shaikh Khalifa Bin Ebrahim Al-Khalifa commented: “The industrial re-classification aims to introduce a global industrial classification standard to the equity market to enhance transparency and provide more reliable information on the performance of companies and the market in particular that is aligned to international best practices.”

“The decision to reclassify current industrial sectors 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 where companies will be classified into sectors based on their principal activity,” Shaikh Khalifa added.

The GICS is a global hierarchical industry classification standard developed by index providers MSCI and S&P Dow Jones Indices and it covers 11 sectors representing first level of GICS. Of the 11 industrial sector groups, companies currently listed on Bahrain Bourse will be reclassified into seven industrial sector groups based on their principal business activity (Level 1): materials (will include 1 company), industrials (covering Capital Goods, and Commercial & Professional Services and Transportation) will include 3 companies, consumer discretionary (covering Consumer Services, Retailing, Automobiles & Components, and Consumer Durables & Apparel) will include 5 companies, consumer staples (covering Food & Staples Retailing, and Food, Beverage & Tobacco, and Household & Personal Products) will include 4 companies, financials (covering Banks, Insurance, and Diversified Financials) will include 22 companies, communication services (covering Telecommunication Services, and Media & Entertainment) will include 3 companies, and real estate (covering REITs, and Real Estate Management & Development) will include 3 companies.

The remaining four industrial sector groups (Energy, Healthcare, Information Technology, and Utilities) will remain inactive as there are currently no companies listed on Bahrain Bourse that can be classified under those groups. However, these four industrial sector groups will be activated with immediate effect when relevant companies to those industry groups are listed.

All listed companies have been briefed on the classification methodology and the new industry sector they will be classified into. Furthermore, Bahrain Bourse plans to conduct various awareness sessions and workshops to the public to raise awareness on this initiative.

Bahrain Bourse’s earlier sector classification had been in place since the establishment of Bahrain Bourse in 1987. Previously, Bahrain Bourse’s industrial classification consisted of six sectors. After the GICS adoption, Bahrain Bourse’s industrial classification will cover the 11 globally-defined Level 1 (Industry Group) in GICS hierarchical classification system. However, once adopted, 7 of the 11 industrial group sectors will be activated, and the rest of the 4 sectors will remain currently inactive.

Following the re-classification, the Bahrain All Share Index calculation will remain unchanged following the restructure and adoption of the new industrial classification. However, sectorial indices will be re-calculated with a starting base value of 3,000 points for all sectors, with the exception of the biggest sectorial index which is the Financials covering 22 companies, which will be re-calculated with a base value of 5,500 points. Historic data for the new sectorial indices will be calculated based on a trailing 12-months period average.

Furthermore, the current sectorial indices will no longer be calculated, however their historical values will continue to be available on Bahrain Bourse’s website on the New Industry Classification page.