BEIJING: China will have to wait to join MSCI’s global benchmarks due to lingering investor concerns about international access to one of the world’s largest equity markets.
The provider of equity indices said on Tuesday that it would include China A-shares, which are listed in Shanghai and Shenzhen, but only once quota, liquidity and ownership issues were resolved.
The Shanghai Composite was down 1.9 per cent in Wednesday morning trading while Shenzhen was off 0.9 per cent.
Tracked by funds worth close to $1.7tn, the MSCI index is the key barometer for investors in emerging markets. China’s eventual inclusion would lead to a rebalancing of global investment, forcing funds to buy shares to match the new index.
MSCI forecasts that global funds would add around $20bn to the Shanghai and Shenzhen markets as a result of its plans, while HSBC puts the figure at closer to $50bn. Its updated consultation paper would give Chinese A-shares a 1.3 per cent weighting in its EM index.
