Home Run for China A-shares
Today, MSCI Inc. (“MSCI”) announced the results of its 2017 Annual Market Classification Review, including its decision on its proposed inclusion of China A-shares in its MSCI Emerging Markets Index and other major global indexes. This is yet another important breakthrough for China’s equity market and for global investors. Investment funds and financial products tracking these indexes globally will now be mandated to invest in the China A-shares market from June 2018. MSCI will consider further inclusion of China A-shares in line with developments in the China A-shares market as against its market accessibility criteria, and subject to further consultation with global investors. This may be in terms of either or both an increased inclusion factor or the inclusion of Mid Cap China A-shares. MSCI has pointed in particular to the removal or relaxation of the daily limits on Stock Connects, decreases in the frequency and extent of voluntary trading suspension practices, and further deregulation of the financial product pre-approval requirements, as being key areas where developments will be carefully observed. This second article will outline the final implementation decision, the reasons behind MSCI’s decision to include China A-shares in its major global indexes, the impact the decision is expected to have and the next steps for inclusion.