Bahrain Bourse adopts GICS for listed companies to boost capital market efficiency

By Amirtha P S, Desk Reporter
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Bahrain Bourse
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Bahrain Bourse, a self-regulated multi-asset marketplace, is preparing to adopt the Global Industry Classification Standard (GICS) for listed companies, effective as of 11th July 2021, to enhance transparency and efficiency in the Kingdom’s capital market and to meet best global practices.

The industrial re-classification targets to establish alignment with global industrial standards for classifying listed companies, offer better information to international investors on the performance of sectoral indices and enable the easier company and sectoral comparability with global peers as well as comparability between organizations and sectors.

Shaikh Khalifa bin Ebrahim Al Khalifa
Shaikh Khalifa bin Ebrahim Al Khalifa
CEO – Bahrain Bourse

“With globalization taking place at a fast pace, our market has also shown dynamic interaction with numerous changes in the global markets. This is a very important step when it comes to assisting investors in taking sector investing decisions and portfolio diversification. The GICS successfully resolves many of the issues with previous classification systems, by reflecting the current state of all industries, identifying very specialized sub-industries, and portraying an accurate reflection of the marketplace as much as possible.”

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 the first level of GICS. Of the 11 sectors, companies currently listed on Bahrain Bourse will be reclassified into seven sectors 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
  • 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.

To increase awareness and give clarity of the new standard, Bahrain Bourse has launched virtual awareness workshops targeted towards various shareholder groups over the past four months to raise awareness on the planned industrial re-classification revamps of listed companies following the adoption of GICS.

Related: Bahrain Islamic Bank unveils its Riffa Innovation Hub