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What are stock market sectors?

What are stock market sectors?

There are more than 2,000 companies listed on the ASX and one of the ways they are categorised is by industry sector.

GICS (Global Industry Classification Standard) aims at standardising industry definitions.

To bring Australia in line with the rest of the world, Standard and Poor’s have reclassified all ASX listed entities according to GICS. These are called GICS sectors.

Sector classification groups companies according to their main business activities, enabling you to look at the whole market and compare companies based on their industry.

The ASX is divided into the following sectors:

Consumer Discretionary: Companies from a broad range of industries such as media, general retailing and gaming. Examples include JB Hi-Fi, Harvey Norman and Crown.

Consumer Staples: Companies involved in the production and distribution of food and beverages. Examples include Wesfarmers, Goodman Fielder and Woolworths.

Energy: Explorers and/or producers of energy resources such as oil, gas and renewable energies. Examples include Oil Search, Santos and Woodside Petroleum.

Financials: Banks, asset managers, insurance companies and other providers of financial services. Examples include Commonwealth Bank, Australian Securities Exchange and National Australia Bank.

Financials excluding A-REITs: Contains all the companies in the financial sector excluding Australian Real Estate Investments Trusts (A-REITs). Examples include companies involved in banking, finance, consumer finance, investment banking and brokerage.

Health Care: Pharmaceuticals, biotechnology, medical practice and pathology companies, as well as junior life sciences and medical device companies. Examples include CSL, Cochlear and Ramsay Health Care.

Industrials: Companies from a broad range of industries such as construction and engineering, infrastructure, transport and commercial services. Examples include Leighton Holdings, Transurban and Qantas.

Information Technology: A variety of mainly small to medium-sized businesses, such as IT consultancies and software developers and vendors. Examples include Computershare, IRESS Market Technology and carsales.com.

Materials: Producers of agricultural commodities, fertilisers, paper and forestry products, chemicals and building materials. Examples include Orica, Amcor and Incitec Pivot.

Metals and Mining: Many of the world's leading resource companies, along with a growing number of mid-tier producers and exploration companies. Examples include BHP Billiton, Rio Tinto and Fortescue Metals Group.

Telecommunications Services: Telecommunications carriers, distributors and resellers. Examples include iiNet and Telstra.

Utilities: Major electricity and gas retailers and a number of smaller utility providers. Examples include AGL Energy and APA Group.

Real Estate: Companies and investment trusts involved in deriving income solely from commercial, industrial and residential real estate (includes REITs). Examples include Mirvac, Stockland and Westfield.

The ASX provides individual indexes for each of the different sectors so you get a better picture of which sectors have been driving the performance of a broader index like the ASX 200.

 

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.