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U.S. experts say MSCI's new China indices show greater weight of Chinese market

Source: Xinhua    2018-03-16 16:28:59

NEW YORK, March 15 (Xinhua) -- The launch of new China-related indices by MSCI indicates that investors around the world need to prepare for China's weight in global indices to rise dramatically in the years to come, U.S. experts have said.

MSCI Inc., a provider of research-based indices and analytics, announced Wednesday the launch of 12 new indices that will expand its China index offering, including the MSCI China A Index, MSCI China A RMB Index, and MSCI China All Shares Large Cap Index.

The move "is an indication of the importance of MSCI's June 20 2017 announcement and upcoming June 1st inclusion of their specific definition of Shanghai and Shenzhen listed securities," Brendan Ahern, chief investment officer of the Krane Funds Advisors, told Xinhua on Thursday.

On June 20, 2017, MSCI announced it would partially include the large cap China A shares in the MSCI Emerging Markets Index and the MSCI ACWI Index.

With A shares to be partially included effective June 1, 2018, the MSCI China Indexes will cover all share types of Chinese companies listed globally.

Ahern saw the latest launch of new China indices as a fresh reference to prepare global investors for the next step of the inclusion process.

"Investors globally will be buying securities in mainland China for the first time. While MSCI's definition of Shanghai and Shenzhen stocks this time is a 200-plus stocks for inclusion based on market capitalization. It will expand in the years to come," he said.

MSCI plans to add 222 China A Large Cap stocks, representing on a pro forma basis approximately 0.73 percent of the weight of the MSCI Emerging Markets Index at a 5-percent partial Inclusion Factor, according to its 2017 market classification review.

The index provider attributed its decision to include China A shares to the opening-up and regulatory progress of the Chinese market.

"With the increased liberalization and internationalization of the China market, investors have expressed a clear need for more insight and tools to make better informed investment decisions," said Theodore Niggli, head of APAC index products, MSCI.

Similarly, Ahern congratulated Chinese regulators on their efforts to "allow MSCI to make this historical decision. They have evolved their rules over time, being attuned to the needs of global asset managers."

The expert also said the formal inclusion of China's A shares in June could open doors for foreign investors with increasingly more opportunities in China.

"It will pave the way for further inclusions for equity markets but also for China's bond market, the world's third largest though excluded from global fixed income indices, to follow a similar path," he said.

"The historical under-investment in Chinese equities will begin to be rectified," he added.

Editor: Zhou Xin
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U.S. experts say MSCI's new China indices show greater weight of Chinese market

Source: Xinhua 2018-03-16 16:28:59

NEW YORK, March 15 (Xinhua) -- The launch of new China-related indices by MSCI indicates that investors around the world need to prepare for China's weight in global indices to rise dramatically in the years to come, U.S. experts have said.

MSCI Inc., a provider of research-based indices and analytics, announced Wednesday the launch of 12 new indices that will expand its China index offering, including the MSCI China A Index, MSCI China A RMB Index, and MSCI China All Shares Large Cap Index.

The move "is an indication of the importance of MSCI's June 20 2017 announcement and upcoming June 1st inclusion of their specific definition of Shanghai and Shenzhen listed securities," Brendan Ahern, chief investment officer of the Krane Funds Advisors, told Xinhua on Thursday.

On June 20, 2017, MSCI announced it would partially include the large cap China A shares in the MSCI Emerging Markets Index and the MSCI ACWI Index.

With A shares to be partially included effective June 1, 2018, the MSCI China Indexes will cover all share types of Chinese companies listed globally.

Ahern saw the latest launch of new China indices as a fresh reference to prepare global investors for the next step of the inclusion process.

"Investors globally will be buying securities in mainland China for the first time. While MSCI's definition of Shanghai and Shenzhen stocks this time is a 200-plus stocks for inclusion based on market capitalization. It will expand in the years to come," he said.

MSCI plans to add 222 China A Large Cap stocks, representing on a pro forma basis approximately 0.73 percent of the weight of the MSCI Emerging Markets Index at a 5-percent partial Inclusion Factor, according to its 2017 market classification review.

The index provider attributed its decision to include China A shares to the opening-up and regulatory progress of the Chinese market.

"With the increased liberalization and internationalization of the China market, investors have expressed a clear need for more insight and tools to make better informed investment decisions," said Theodore Niggli, head of APAC index products, MSCI.

Similarly, Ahern congratulated Chinese regulators on their efforts to "allow MSCI to make this historical decision. They have evolved their rules over time, being attuned to the needs of global asset managers."

The expert also said the formal inclusion of China's A shares in June could open doors for foreign investors with increasingly more opportunities in China.

"It will pave the way for further inclusions for equity markets but also for China's bond market, the world's third largest though excluded from global fixed income indices, to follow a similar path," he said.

"The historical under-investment in Chinese equities will begin to be rectified," he added.

[Editor: huaxia]
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