Korea Exchange will introduce its own industry classification system, KRICS (KRX Industry Classification Standard), reflecting the domestic industrial structure and the characteristics of listed companies. A key feature is the creation of a standalone mobility sector that groups automobiles and parts with passenger transport. It also separates major domestic industries such as shipbuilding, batteries, semiconductors and games into distinct industries.

Korea Exchange said on Tuesday it has completed the build-out of KRICS to meet demand for industry-based classification of listed companies and for developing a range of indices.

The exchange drew up a draft through an external research project in 2024. It then finalised the system after collecting opinions and making revisions. The "KRX Industry Classification Methodology" will take effect from Wednesday.

KRICS sets 9 sectors at the top level based on a value chain from production to consumption in the domestic economy. In detail, it is divided into 9 level-one sectors, 24 level-two industry groups, 60 level-three industries and 129 level-four sub-industries.

The 9 sectors comprise energy and chemicals, materials, industrials, mobility, information technology, finance and real estate, consumer goods, healthcare, and media and content.

In particular, it created mobility as a standalone sector to reflect the characteristics of the domestic stock market. It grouped automobiles and parts and passenger transport, which are classified separately under the existing system, into one sector based on the common business area of "movement".

It also separately classified industries that draw strong interest from domestic investors. Within industrials, it classified shipbuilding and vessels and batteries as separate industries, and within information technology it distinguished semiconductors and displays. Within media and content, it set cultural entertainment and game services as separate industries.

It also included in separate classifications industries that have grown in weight in the domestic stock market, such as aerospace and defence, renewable energy and biotech.

The industry classification will be revised on a regular basis each April based on consolidated financial information in the most recently disclosed business reports and audit reports. It said it is designed to allow comprehensive consideration of actual business characteristics and market perception. It will also conduct ad hoc reviews when a new listing or a major corporate event is expected to lead to a change in industry classification.

It also established a procedure under which listed companies or index users can ask the exchange to review a classification change if they judge it necessary.

The exchange plans to disclose KRICS level-one and level-two classification results for listed stocks, along with related market data such as share prices and trading volume, via the KRX Index website from next month on the 26th.

In the second half of this year, it plans to apply KRICS to flagship indices such as the KOSPI 200 and the KOSDAQ 150. It then plans to expand the scope of indices to which it is applied in stages.

A Korea Exchange official said a classification system reflecting the domestic industrial structure and the characteristics of listed companies would help improve the market's understanding of listed companies and increase comparability by industry. The official said it is expected to invigorate the development of industry- and theme-based indices and improve convenience for index users.