MSCI has now formally included China A-Shares in its indices, marking an important milestone for the internationalisation of China's capital markets. Why not get a refresher on the details?
What's going on?
- MSCI has included 226 China A-Shares large-cap stocks at a 5% partial inclusion factor, giving A-Shares a weighting of about 0.7% in the MSCI Emerging Markets Index and 0.1% of the MSCI All Country World Index.
- MSCI will look at raising the 5% inclusion factor, which could increase the current weighting of A-shares in the indices to around 15%, and will also consider including mid-cap stocks.
Why does it matter?
- The small weighting at the initial stage could be seen as a symbolic gesture, but the prospects for the further development of China's equity market are looking positive.
- The prospects of increasing weighting could lead to greater inflows in the coming years, with China's growing influence creating new investment opportunities and ramping up demand for local research on Chinese companies.
- As China's equity market continues to open up, we may also start to see similar developments in its bond market.
Download Market Insights Publication: China A-shares finally take their place on the world stage