Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 11 September 2018 at 10:56 GMT

The big change coming to equity markets this fall

Head of Equity Strategy / Saxo Bank
By Peter Garnry

As of the market close on September 28, MSCI will make a big change to its GICS classification. Telecommunication Services changes its name to Communication Services and will be moved into the Cyclical sector index. Media companies will move from the Consumer Discretionary sector to the new Media & Entertainment industry group under the new Communication Services sector, and Internet Services in the Information Technology sector will also move to the Media & Entertainment industry group.

Lastly, e-commerce companies will move from Information Technology to Consumer Discretionary. The slide from MSCI below gives the overview.

The key points are:

● MSCI now classifies Alphabet (Google) and Facebook as media companies. This increases the probability that US regulators will do the same.

● Ebay, Alibaba, etc. will go into retailing, making the category more streamlined.

● Information Technology becomes much less software-oriented. Software, as we noted last week, has carried its performance for a decade as we wrote about last week. This means that IT will "go back to the old days” and be more concentrated on semiconductors and hardware.

● The Media & Entertainment industry group will become the dominant index weight in the new Communication Services sector. MSCI has chosen to change it to become cyclical but based on our observations, companies such as Google, Facebook, Baidu, Comcast, Disney, and Netflix do not behave in a strictly cyclical fashion as many of these services are “utility-like” for many families and businesses. So here we disagree with MSCI, but overall the new classification is a good change.

 This is roughly the new weight composition in the new Communication Services sector:



The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail