Worldwide

China A-shares added to MSCI indices for first time

China A-shares added to MSCI indices for first time”

SHANGHAI, June 21 Chinese stocks gave only a lukewarm reception on Wednesday to an move by index provider MSCI to add some mainland Chinese stocks to one of its key benchmarks, with traders saying a "Yes" decision had already been largely priced in.

MSCI changed its tactics slightly this year, by focusing on stocks accessible via the Stock Connect, which has a very low barrier to entry and guarantees that an investor seeking A-share exposure will be able to obtain access without needing onshore trading accounts or gaining special licences from the Chinese authorities.

A decision by USA -based index provider Morgan Stanley Capital International (MSCI) to include China's domestic stocks is expected to have a limited impact on South Korean shares, analysts here said Wednesday. "In general, blue chips and large cap stocks in the A share markets with stable dividend policies are expected to outperform".

According to the company, a two-step inclusion process will be used.

The index provider delayed decisions on the future classification of Argentina and Nigeria.

Before making the decision, MSCI conducted an extensive consultation that included a large number of asset owners, asset managers, brokers and other market participants. Moutai surpassed Diageo in April when its market value reached US$71.5 billion.

"The decision of the MSCI to include China A-shares into the MSCI EMI has been long awaited by all market participants", director of legal and tax affairs at ALFI, Marc-Andre Bechet, said.

MSCI's nod also comes after the domestic market was rocked by painful plunges in 2015 and 2016, and a liquidity crisis fuelled by Beijing's recent efforts to tighten credit over concerns the country's massive debt could trigger a financial meltdown.

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.

The benchmark Shanghai Composite Index jumped 0.29 percent while the Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 0.24 percent in early trading. But experts warned that the inclusion in MSCI's global benchmark equity market will have limited impact on the Chinese stock market. Your traditional A-share is a company incorporated in mainland China, with shares listed on the exchanges in either Shanghai or Shenzhen. "China's weighting in current indices under represents its impact on the global economy".

"In addition to capital inflows, the style of overseas investment institutions will help traders improve their trading strategies, which will make the A-share market more standardized and internationalized", said Hao Hong, chief China strategist at Bank of Communications International Holdings Co.

But they said it could still take as long as a decade for MSCI to include Chinese shares at the country's full weighting, citing ongoing uncertainty over the pace of reform, the risk of regulatory shifts and weak corporate governance.

"This decision has broad support from global institutional investors with whom MSCI consulted, primarily as a result of the positive impact on the accessibility of the China A market", MSCI said in a statement.



Like this

loading...
loading...

Latest


11 April 2018
England All-rounder David Willey Replaces Kedar Jadhav
He has two centuries and seven half centuries to his name, which have come while playing in various T20 leagues across the world. With an experience of more than 140 T20 matches, David will prove out to be the Trump Card of Chennai Super Kings this season.

23 June 2017
Gas prices help slow annual inflation rate to 1.3% in May
Mexico's central bank has raised its benchmark interest rate a quarter-point to 7 percent in an effort to limit inflation.

23 June 2017
Theresa May to outline guarantees for European Union expats in Britain
Downing Street did not reveal details of May's proposals, but full details of her plans are expected to be published on June 26. Tusk has made the comments a few hours before a bilateral meeting with British Prime Minister Theresa May.

23 June 2017
Turkey rejects Gulf Arab states' demands over its Qatar base
Suspend the ties with the Muslim Brotherhood , a forbidden organization in the Arab states. It is not known to have a presence in Qatar .

23 June 2017
Shiv Sena backs Kovind as NDA's presidential pick
When Home Minister Rajnath Singh and I&B minister Venkaiah Naidu came to meet us, they said that they want to build a consensus. Thackeray said all the party legislators and MPs will support Ram Nath Kovind , nearly clearing his way to Raisina Hill.

23 June 2017
Global Emollient Market 2017 - Business Attractiveness and Forecast to 2021
Top down approach was taken into consideration for deriving the market numbers for the product application and type segments. Various factors which influence the growth of Glycol-borax Deicing Fluid market has been covered at depth in this report .

23 June 2017
Trump Plans Major Restrictions on Cuba Travel
Treasury and Commerce Departments will provide more specific regulations over the next few months. Cuban-American GOP lawmakers, Sen.

23 June 2017
Saudi King ousts nephew, names son as crown prince
Mohammed is also defence minister with overall responsibility for the kingdom's military intervention in Yemen. He has been the driving force behind all the major changes Saudi Arabia has witnessed over the past two years.

23 June 2017
Body found in Arlington landfill is missing Bedford teen
Thursday night vigil: Friends gathered Thursday night at Central Junior High School in Euless, where Kaytlynn atttended school. Kaytlynn Cargill's body was discovered Wednesday by a worker at a landfill in Arlington, Texas, news station WFAA reported .

23 June 2017
Mayweather, McGregor agree to August fight
Mayweather is nearly universally considered the greatest boxer of his era. Floyd will go back to retirement and Conor will go back to the UFC.