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Chinese A-shares may make it into key indexes sooner than you think

By NexChange
Asset Management


Investors have expected the MSCI to include China A-Shares in its benchmark indices twice during the past two years. But each time, the index compiler has backed off, pointing to barriers to foreign investor access.

Recent state intervention (or manipulation) in the markets seemed to put the kibosh on their inclusion any time soon. But, fund managers might be missing a trick.

“Many investors are underestimating the impact of the inclusion of China A-shares in global emerging market benchmarks and may be caught off guard when it happens,” reports AsianInvestor, citing fund management experts. (paywall)

“This is despite the move by U.S. fund giant Vanguard to steadily incorporate mainland stocks into its EM exposure.”

Wang Qi, a partner at Shanghai-based Mega Trust Investments notes that the Chinese government’s intervention in the stock market in the summer means that many money managers assume that A-Share inclusion in the MSCI benchmark indices is now in the distant future.

“However, if you look into the details of the review process, this is not a major concern for the index providers,” he says.

The MSCI is likely to conclude its next assessment in the first half of next year.
Photo: Jim Winstead


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