Analyst View - MSCI adds domestic Chinese stocks to Emerging Markets Index

Shanghai stocks jump on MSCI call buck Asia retreat

The acceptance of some Chinese "A" shares into MSCI's Emerging Markets Index was seen as a symbolic win for Beijing after three failed attempts.

"Despite the reduced A-shares index weighting of 0.73 percent, today's announcement represents a defining moment for the Chinese stock market".

The senior official said financial authorities will closely monitor the local stock markets.

"China has been given a big tick in the box from the worldwide investment community and the MSCI", according to Sean Taylor, Asia Pacific chief investment officer at Deutsche Asset Management.

"Over the long term, assuming further liberalisation and regulatory reform of the mainland stock markets, the depth of China's A-share market could mean China gains substantial weight within those broader indices".

"MSCI will reflect a higher representation of China A shares in the MSCI Emerging Markets Index when there is further alignment with Global market accessibility standards, sustained accessibility within Stock Connect is proven, and worldwide institutional investors gain further experience in the market".

China's stocks took a major step toward global acceptance on Wednesday, finally winning a long campaign for inclusion in a leading emerging markets benchmark, in what was seen as a milestone for global investing.

"MSCI's decision to include A shares in its Emerging Markets Index is a pivotal moment for global investment in China's capital markets".

She believes investors and asset managers need to speed up the development of their research capabilities and infrastructure operations to adequately handle the world's second largest equity market.

For example, Chinese regulators still insist on pre-approval for overseas financial products linked to indices with Chinese mainland shares in them. The Shanghai Composite Index traded Wednesday at 3156.21 up 0.52%.

Asia also ended mostly lower, with Hong Kong's Hang Seng down 0.6 percent and Japan's Nikkei down 0.5 percent but China's Shanghai gained 0.5 percent on addition of China A shares in MSCI Emerging Markets Index. While the near-term impact of MSCI's decision on the ETFs and index funds tracking affected benchmarks will be minimal, it's likely that A-shares will account for a growing portion of these funds' portfolios down the road.

An estimated $1.6 trillion in assets around the world were benchmarked to the MSCI Emerging Markets Index as of the end of June 2016.

A lack of capital liberalisation has served to keep mainland Chinese equities, or A-shares, relatively insulated from global capital flows. Exposure may be limited, but a repeat performance of 2015's China stock-market crash could have huge ramifications.

The company has been in discussions with Chinese regulators and global investors for almost four years on whether to add yuan-denominated shares listed in Shanghai and Shenzhen to the benchmark.

MSCI first began its review on whether to include A-shares four years ago, but each year since it declined to include them because of concerns around how easily foreign investors could access the market.

MSCI's indexes are closely followed by fund managers and the move could draw more foreign investment to Chinese firms, though analysts said they didn't expect an immediate flood of money because the two-phase implementation is still a year away.

Related News:

  • Queen's speech dominated by European Union exit

    Consequently, the sources say, talks "haven't proceeded in the way we would have expected". It is not expected that new pension policy will feature much in the speech.

    The Dow Chemical Company (DOW) closed the last trading session at $65.1

    The basic materials company reported $1.04 earnings per share for the quarter, topping the consensus estimate of $0.99 by $0.05. Riggs Asset Managment Inc holds 2.17% of its portfolio in Dow Chemical Co (NYSE: DOW ) for 76,135 shares.

    Three share top spot after 2 rounds at St. Jude Classic

    Jutanugarn finished with a three-under 69 in the final round and was tied with Thompson (72) and Chun (70) at 17-under 271. The Irishman shot a second round of five-under and now trails the leaders by three shots going into the weekend.
  • Congressional Baseball Practice Shooter Acted Alone, Had No Terrorist Connections

    Scalise suffered a gunshot wound to the pelvis a week ago today while practicing for the Congressional baseball game. He remains listed in fair condition in the hospital after undergoing multiple surgeries and is expected to recover.

    India accuses UNSC of 'shying away' from addressing terror attacks in Afghanistan

    Maleeha Lodhi notified that safe havens of Taliban exist inside Afghanistan and not outside given the large areas they control there.=.
    Triple-A team moving from Colorado Springs to San Antonio

    Triple-A team moving from Colorado Springs to San Antonio

    They will continue playing at Nelson Wolff Stadium (the Missions' current home) until a new stadium is completed. The facilities we have, the kind of ownerships groups we have, the Elmore group mirrors that.
  • Boosts Rating On CIRCOR International, Inc. Comm (CIR)

    The industrial products company reported $0.32 EPS for the quarter, missing analysts' consensus estimates of $0.35 by $0.03. Energy provides engineered integrated flow control solutions, valves and services primarily in the gas and oil end market.

    Troubled Cristiano Ronaldo gets Madrid court date

    Mourinho allegedly committed tax fraud in 2011 and 2012, according to Madrid's provincial state prosecutor's office. Perez said he could understood why Ronaldo had been upset after he was accused last week of tax fraud .

    Apple Inc. (AAPL) Given Average Rating of "Buy" by Brokerages

    Benson Investment Management Company Inc. acquired a new stake in shares of Apple during the fourth quarter valued at $3,127,000. On Tuesday, May 16 the insider Riccio Daniel J . sold $1.86 million. (NASDAQ:AAPL) was sold by Srouji Johny on Thursday, May 25.
  • US Shoots Down Pro-Assad Regime Drone In Syria

    US Shoots Down Pro-Assad Regime Drone In Syria

    Australia is part of a US -led coalition that has been waging war against Islamic State militants in Syria and Iraq . Handel, 55, will become the first Republican woman to represent Georgia in the U.S.

    United Kingdom police studying cause of death of man in mosque attack

    He was pronounced dead at the scene at 1:04am. "Some tried to hit and punch and kick him". Security minister Ben Wallace said the suspect was not known to security services.

    Senate to unveil secret health care bill

    In at least one respect, the draft Senate bill is actually meaner than the House bill, which had a 17 percent approval rating. The poll, which surveyed 2,051 registered voters, was conducted from Thursday to Sunday and has a 2 percent margin of error.


Most liked

United Kingdom and European Union to begin Brexit talks
Both sides acknowledged the clock was ticking, with the date for the UK's departure from the European Union fixed for March 2019. Britain appeared to have stepped back from its original bargaining position of discussing trade talks in tandem with exit talks.

Shrinking US stockpiles are cold comfort for oil investors
Gasoline stocks dipped 578,000 barrels compared with expectations from analysts for a seasonally unusual 443,000 barrel gain.

India clear favourites against inconsistent West Indies
You can also catch Firstpost's live blog of first ODI between India and West Indies to catch all the live score and updates. The first ODI match between India and West Indies begins at 6:30 PM IST (Friday evening).

CT sailor among 7 killed in collision
Seven sailors were killed in the collision and several more, including the ship's commander, were injured. He said in a statement that "we are all deeply saddened by the tragic loss of our fellow shipmates".

FIFA Confederations Cup: Mexico snatch late 2-2 draw against Portugal
Leon Goretzka socred the eventual game victor in the 48th minute to open the second half for Germany. Ochoa was then forced to make a smart stop to prevent Carlos Salcedo scoring an own goal.

Trump takes U-turn, says we have great relationship with China
If they are unable to do so, the USA , with its allies, will! The United States has about 28,500 troops in the South. The U.S. side is expected to press China to cooperate on a further toughening of worldwide sanctions on North Korea.

Johnson & Johnson (NYSE:JNJ) 2016 Q4 Sentiment
It dived, as 51 investors sold DISH shares while 144 reduced holdings. 114 funds opened positions while 731 raised stakes. Huntsman Corporation is a manufacturer of differentiated organic chemical products and of inorganic chemical products.

Investors Buy Large Volume of Put Options on Chipotle Mexican Grill (CMG)
Paul Ruddock increased its stake in Sunpower Corp (SPWR) by 491.27% based on its latest 2016Q4 regulatory filing with the SEC. On Monday, March 27 the insider BLOCK ARTHUR R sold $738,584. 10,577 shares were sold by Coletti Janet M .

Fastjet recognised as Best African Low-Cost Airline
The A380 flights include 26-inch entertainment screens, seats almost 2-feet wide and privacy partitions. Mansury during the official ceremony, last night, Tuesday, June 16.

The Comerica Bank Increases Stake in Kinder Morgan, Inc. (KMI)
National Bank Hapoalim Bm holds 23,567 shares. (NASDAQ:AAPL) news were published by: Fool.com which released: "3 Apple Inc". Halsey Associates Inc sold 103,292 shares as the company's stock declined 10.34% while stock markets rallied. (NYSE:SE).

US Jobless Claims Increase To 241000, No Implications For Fed Policy
The so-called continuing claims have now been below 2 million for 10 straight weeks, indicating diminishing labor market slack. Economists were expecting claims to come in at 240,000, so it was pretty much on target with expectations.

Spanish prosecutors accuse Mourinho of 3.3 mln eur tax fraud
It is still too early to tell if Ronaldo will leave, but it feels more likely that he will stay. "The presumption of innocence has not been taken into account".

Queen to outline United Kingdom government plans
But his claim to head a "government in waiting" was mocked by the Prime Minister, who he had "fought a spirited campaign and come a good second".

Yay! Beyonce Has Given Birth To Twins, Congratulations Jayz
Several reports say Beyonce delivered twins earlier this week and have shared the news only with close family and friends. While the couple has not officially announced their new additions, sources confirmed to People that the twins arrived.

Tropical Storm Cindy makes landfall in Louisiana
This heavier rainfall will stretch from southern Fulton county to Hopkins county with predicted totals of three to four inches. Strong winds from Tropical Storm Cindy are reportedly to blame in the death of a 10-year-old child in Fort Morgan, Alabama.