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HCM introduces new sector indexes

Update: November, 24/2015 - 09:04
The sector indexes will help investors capture the breadth, depth and evolution of businesses in the same sector through which they can see capital movement and growth potential of each sector in general and of individual stocks in particular. — Photo baodautu.vn
HA NOI (VNS) — The HCM Stock Exchange is developing new sector indexes based on the Global Industry Classification Standard (GICS) and will introduce them in the first quarter of next year.

This is being done to provide investors with efficient investment tools.

"Investors have a higher demand for investment information by sector. Keeping that in mind, the HCM Stock Exchange continues to develop sector indexes to support their investment decisions," the exchange (HOSE) said in a statement yesterday.

The sector indexes will help investors capture the breadth, depth and evolution of businesses in the same sector through which they can see capital movement and growth potential of each sector in general and of individual stocks in particular.

In addition, sector indexes would help the exchange build a specific data system for each sector which supports its management and supervision of listed companies in each sector, it said.

Along with the benchmark VN-Index, HOSE has developed five indexes (VN30, VNMidcap, VNSmallcap, and VN100, in addition to VNAllshare), and their corresponding total return indexes (TRI).

The HCM City's exchange has been using Viet Nam Standard Industrial Classification 2007 (VSIC 2007) based on the United Nation's International Industrial Classification of All Economic Activities since 2010.

This month, the exchange signed a contract with MSCI, the US-based provider of stock market indexes, to apply the GICS to all listed companies on the HCM Stock Exchange.

GICS, developed by MSCI and credit rating agency Standard&Poor's, is a four-tired, hierarchical industry classification system. This standard is widely used in the global financial community which consists of 10 sectors, 24 industry groups, 67 industries and 156 sub-industries.

More than 43,000 companies ranging from asset managers, brokers, custodians, and consultants, to research teams and stock exchanges in over 120 countries and territories are using GICS, accounting for 90 per cent of global traders and 95 per cent of the world's market capitalisation.

Under the agreement with MSCI, the HCM City's exchange will provide free information of companies assigned to the first two tiers (sectors and industry groups). Depending on the market development, the exchange will consider extending the provision of more detailed information of industries and sub industries.

According to the new classification standard, some shortcomings of the current classification system will be resolved. For example, Masan Group (MSN), one of Viet Nam's 10 biggest stocks by market capitalisation, will be moved from the financial and insurance sector to consumer staples which make up the majority of the company's total revenues.

Three sectors occupy the biggest market capitalisation on the HCM Stock Exchange are financial sector at 46.95 per cent, consumer staples at 23.91 per cent, and industrials at 8.57 per cent, according to the VNAllshare data by the end of June, 2015. — VNS

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