SWEDEN – The OM Stockholm Exchange has changed its industry classification to match that of the Global Industry Classification Standard (GICS) - developed by Morgan Stanley Capital International (MSCI) and Standard & Poor’s.

The industry classification will now be divided into four different levels with ten sectors – Telecommunication Services being added to the former nine strong sector list.
Ninety two new industry indices will be added, creating an total of 23 industry groups, 59 industries and 123 sub-industries.

Companies are classified according to their principal business activity, defined as where the major part of the company’s revenue is generated.
Observers say one of the main reasons for changing the classification is the removal of telephone company Ericsson from the industrial sector to place it in the information technology sector.
As a giant in the Stockholm Exchange, Ericsson has tended to drag the industrials index down whenever high-tech shares have slumped.

“ Since it (Ericsson) is by far the Stockholm Exchange’s largest company, it is important to classify it in the right manner. It looks odd when the Industrials Index declines when high-technology firms fall on the stock market, “ says Claes Urban Dackberg, responsible for business development at the Stockholm Exchange

The exchange will also launch its own benchmark in February. The benchmark index will take into account free float weighting and combine the features of a broad portfolio with sufficient liquidity in the underlying equities, says OM.