Bursa Malaysia revises sector classification, indices

KUALA LUMPUR: Bursa Malaysia Bhd today introduced five new sectors, among other changes, to the stock exchange's sector classification and sectorial indices, aligning its sector classification with internationally recognised standards.

The five new sectors and corresponding indices introduced are energy, healthcare, telecommunications & media, transport & logistics and utilities.

Three existing sectors and the corresponding indices will be broadened and renamed, including consumer products (renamed consumer products & services), finance (renamed financial services) and industrial products (renamed industrial products & services).

Four sectors are removed, which are hotel, infrastructure project companies, mining and its corresponding index as well as trading/services and its corresponding index.

The new sector classification is intended to ensure that Bursa Malaysia's sectors and sectorial indices continue to appropriately represent the global equity markets, enabling asset owners, asset managers and investment research specialists to make consistent global comparisons by industry.

For example, companies previously under the sector of trading/services, which are too broad based, are now classified under utilities (Tenaga Nasional Bhd), telecommunications & media (Maxis Bhd), consumer products & services (Genting Bhd).

The new sector classification will also see the introduction of a two-tiered structure, with public listed companies (PLCs) classified within main sectors and subsectors. The consideration used to determine sector classification will be revenue streams (taken from the PLCs' audited accounts) as well as the core business, direction and future plans of the PLC. The new classification will allow for better scoping of sector analysis to pinpoint industry investment opportunities, in line with global market trends.

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Effective today, there are 13 sectors, of which are broadened to 42 sub-sectors.

Bursa Malaysia CEO Datuk Seri Tajuddin Atan said this initiative ensures a more comprehensive, accurate and relevant classification of PLCs, and provides increased clarity, better structure and universality to meet the needs of the investment industry.

“For investors, the benefit of uniformity and standardisation will allow for better refinement of risk assessment through greater granularity on the asset allocation for investment purposes,” he said at the launch.

Bursa Malaysia head of information services Fareedah Hussein said the exchange took 18 months to revamp and construct the 13 sectorial indices.

She added that a small number of companies, mostly with diversified businesses, challenged the exchange on its allocation but they relented when Bursa Malaysia explained the change and the importance of placing them with the right peers for accurate peer analysis.

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