- Industry Classification in KOSPI Industry Group Indices
The industry classification in KOSPI Industry Group Indices was established to release an index for each industry group.
The Industry Group Indices were not calculated when the stock market was first established. But, as the number of listed companies increased, it was necessary to know price movements of each industry group. Consequently, the industry group indices have been released since Jul. 14, 1974. Since 1978, the listed companies have all been classified into 16 industries and 15 sub-industries according to Korea Standard Industry Classification (KSIC). As the market size of the banking industry has grown, some businesses were added to the sub-industry indices list in 1988: banks, short-term investment, and securities.
The stock market was many years from when the industry classification system had been implemented. Meanwhile, a problem had been continuously raised that the existing classification system did not systematically cover a change in industry weighting as new industries appeared, state-of-the-art ones developed and so old industries disappeared. Then a new classification system was introduced. At last the industry group indices were announced in accordance with the new system in place since Nov. 6, 2000.
The reformed classification allowed the dual systems, that is, one for stock index and the other for statistics to be united into one system, while industry names under the new system were simplified so that individual investors could easily understand them. Also the seemingly over-segmented indices were incorporated from 35 to 22. In case an industry group made a significant progress such as communication, electric and gas utilities, medical precision and services, and drew a good deal of attention from investors, the group was classified separately with an index for it.
- Industry Classification in KOSDAQ Industry Group Indices
When KOSDAQ was first set forth, the whole industry was classified into just five areas: manufacturing, construction, distribution service, finance and other.
As KOSDAQ was getting so crowded with IT specialist companies, a new industry group for IT was added on Oct. 29, 2001. Since then, the industry classification has been expanded and segmented from the existing five groups to 19 general groups and 14 IT groups. The 19 groups include food, beverage & tobacco, textile & apparel, paper & wood, publishing & media reproduction, chemicals, pharmaceuticals, nonmetals, metals, machinery & equipment, general electricity & electronics, medical & precision devices, transportation equipment & parts, other manufacturing, manufacturing, construction, distribution, transportation, finance, and other services, while 14 IT groups including KOSDAQ IT, communication & broadcasting services, IT S/W & computer services, IT H/W, communication services, broadcasting services, Internet, digital contents, S/W computer services, communication equipment, information appliances, semiconductors, and IT components.
As leisure and resort businesses were emerging with five-day workweek anchoring, recreation & culture was added to the industry groups list. Eventually, it has evolved into what it is today.
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