Company classification (GICS)

The exchanges in Stockholm, Helsinki, Copenhagen, Iceland, Riga, Tallinn and Vilnius all use the Global Industry Classification Standard (GICS) for industry classification of listed companies. A common standard facilitates analyses and comparisons between industries and companies in the Nordic and Baltic region.

 

Peer groups - instant indicators of trends

A standard company classification provides comprehensive peer groups that make methodical comparisons easier for those investing in the Nordic and Baltic markets as well as listed companies. Additionally, the classification improves the visibility of the listed companies, and enables a deeper understanding of the core businesses of the companies. Peer groups provide a dynamic structure in which a company can benchmark its share performance against others in the same segment. It also shows where the sector at large stands: is performance going up or down? Most investors follow the markets sector by sector. Peer groups make it eminently possible to gain a total overview with a glance. By following peer group indexes, investors can learn to ‘think outside the box’, make better and more innovative decisions and manage their portfolios more effectively.

 

A Morgan Stanley Capital International (MSCI) product

GICS was developed by Morgan Stanley Capital International (MSCI), which is an independent supplier of global indexes and benchmark-based products and services; and Standard and Poor's (S&P), an independent company providing financial data and investment services and a leading supplier of global share indexes.

The GICS structure consists of the following four levels:
Sectors (10)
Industry groups (24)
Industries (64)
Sub-industries (139)

This classification is based on each company's principal activity, which represents the business area that generates the largest proportion of revenue for the company. The company has been placed in the sub-industry that most closely corresponds to its principal activity; the other industry levels derive automatically from this classification.

The advantages of the GICS structure

 

• Universal: The classification applies to companies globally.
• Accurate: The structure accurately reflects the 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 MSCI and Standard & Poor's to ensure that the structure remains fully representative of the universe.
  

 

The ten sectors in the GICS classification are as follows: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Telecommunication Services and Utilities.

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GICS Sector Definitions 2006 English