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MANILA - The Philippine Stock Exchange will make adjustments to the sector classification system of listed companies to align the bourse’s standards with international best practices.
In a statement, the PSE said it will add Electrical Components & Equipment and Other Industrial under the Industrial Sector to replace the existing Diversified Industrials subsector.
In addition, the new subsectors Casinos and Gaming, Retail and Other Services shall take the place of the Diversified Services subsector under the Services Sector.
The changes to the sector classification of listed firms will take effect on July 2.
"The upcoming adjustments will give market participants, including global investors, better guidance or comparables in assessing companies in our market. This redounds to a clearer process of valuing listed firms and is consistent with our objective of aligning our standards with global best practices," said Hans Sicat, PSE president and chief executive officer.
When the current sector classification was introduced in 2005, the Diversified Industrials and Diversified Services subsectors were created to serve as "catch-all" subsectors in case a listed company does not meet the requirements of other more specific subsectors.
Eleven companies fall in the Diversified Industrials and 12 firms in the Diversified Services subsets.
Under the PSE Sector Classification Guide, a company shall be classified to the sector and subsector that closely described the business activity that generates at least 60 percent or more of the company's revenues.
The proposed creation of subsectors and reclassification of companies will have minimal impact on sector index calculation. Sector index memberships of reclassified companies will be likewise transferred to the new sector classification.
"The enhancements in our sector classification process follow the changes we undertook to improve our index management system. We believe that this continuous process to find ways to elevate our standards to global best practices will benefit our listed companies and investors," Sicat said.
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