Date
23 September 2017
Adding A shares to the MSCI index could bring tens of billions of dollars into China’s stock market. Photo: Reuters
Adding A shares to the MSCI index could bring tens of billions of dollars into China’s stock market. Photo: Reuters

China moves a step closer to key MSCI benchmark

China is closer to joining MSCI’s widely tracked Emerging Markets Index, the leading index service provider said Tuesday.

MSCI said a few important remaining issues related to market accessibility must be resolved, the Wall Street Journal reported.

Once the review is complete, the shares can be added to the widely tracked index.

That could happen even outside the regular schedule of its annual market classification review, the newspaper said.

The company said it would form a working group with the China Securities Regulatory Commission.

The decision defers a key milestone in China’s ambition to be recognized as a magnet for global capital.

Adding Chinese shares to the index, a benchmark tracked by some US$1.7 trillion of assets, could bring tens of billions of dollars into China’s stock market, the report said.

“Substantial progress has been made toward the opening of the Chinese equity market to institutional investors,” said Remy Briand, MSCI managing director and global head of research.

“In our 2015 consultation, we learned that major investors around the world are eager for further liberalization of the China A-shares market.”

For global investors, the decision means China A shares will remain largely excluded from their portfolios, for now.

The US$10 trillion market is the second-largest in the world, after the United States.

Many fund managers allocate assets based on the underlying benchmarks; the MSCI indexes are the most widely used ones among international investors.

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