Markets

What is China’s A-share MSCI inclusion?

SHANGHAI: Global market research and index company MSCI Inc said on Tuesday it would add 234 China-listed shares to its emerging market benchmark in a two-step process in June and September, a move expected to drive a surge of foreign inflows into the country's stock markets.

While some foreign investors are still haunted by memories of China's 2015 stock market crash and concerns about Sino-US trade frictions, a deeper fear of missing out is widely expected to boost overseas investments in mainland stocks.
MSCI's decision last June to include yuan-denominated Chinese stocks, known as "A-shares", into its emerging market (EM) index triggered a rally in Chinese blue-chips in 2017, though the market has corrected this year amid fears that a trade war will undermine the world's second-largest economy.

But with the MSCI inclusion nearing, there are signs of renewed interest in Chinese big-caps as asset managers have been rushing to launch funds tracking MSCI A-share indexes.

MSCI, a US-based creator of widely-watched stock indices, will add 234 mainland traded big-caps to its benchmark Emerging Markets and All Country World Index indices. The companies are predominantly blue chips, like Shanghai-listed SAIC Motor Corp or famed liquor maker Kweichow Moutai Co Ltd .

Why is this important?

MSCI's indices are closely watched and trusted. Its EM index has funds with assets under management in excess of $1.6 trillion benchmarked to it. That means that when Chinese shares are added to the index, money that follows the benchmark will have to buy Chinese stocks to avoid deviation.

Original Article

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