NH Investment & Securities said on Tuesday it has developed NHICS (NH Industry Classification Standard), an industry classification system specialised for the South Korean stock market, in cooperation with Koscom, making it the first domestic brokerage to do so.

NHICS has NH Investment & Securities in charge of designing the classification system and classifying listed companies, while Koscom is responsible for external provision and calculating the actual industry indices. It is the first case in South Korea of a brokerage and a financial IT institution jointly developing an industry classification system by combining their respective expertise.

NHICS is an industry classification system that structures South Korean listed companies into a three-tier framework of 13 major categories, 31 mid-level categories and 73 subcategories. It is designed to enable a clearer and more multidimensional grasp of performance by industry. It particularly reflects the structure of Korea's capital market, industry characteristics and the perspectives of actual investors.

Notably, it separated the secondary battery industry into an independent major category in the local stock market. Under existing classification systems, secondary battery companies were included in the IT industry, creating a limitation in which industry performance was mixed. NHICS is designed to enable a clearer analysis of performance by industry. It also reflects the structure of Korea's capital market by setting holding companies as a separate major category.

In classifying companies, it uses revenue share as a baseline while combining analysis by industry-specialist analysts to comprehensively reflect companies' roles within their industries and their standing from an investment perspective. For example, Hyundai Rotem was included in the "machinery" industry under existing classification systems, but NHICS reclassified it as aerospace and defence industries after considering the strategic importance of its defence business.

Yoon Byung-woon, chief executive of NH Investment & Securities, said, "NHICS is the result of a data and research competitiveness enhancement strategy that we have worked on since I took office, and it is an industry classification system that faithfully reflects the structure of the domestic stock market and investor perspectives." He added, "We plan to make it easy for market participants such as pension funds, institutional investors and individual investors to use."