MSCI Inc. the provider of global equity indexes have announced that it expects to include China A‐shares in its global benchmarks after a few important remaining issues related to market accessibility have been resolved.
MSCI and the China Securities Regulatory Commission (CSRC) will form a working group to contribute to the successful resolution of these issues.
“Substantial progress has been made toward the opening of the Chinese equity market to institutional investors,” said Remy Briand, MSCI Managing Director and Global Head of Research. “In our 2015 consultation, we learned that major investors around the world are eager for further liberalization of the China A‐shares market, especially with regard to the quota allocation process, capital mobility restrictions and beneficial ownership of investments.”
MSCI stated that it may announce the decision to include China A‐shares in the MSCI Emerging Markets Index as soon as the issues it has outlined are resolved. This may happen outside the regular schedule of its annual Market Classification Review.
Commenting on the move Michael Chan, managing director and head of asset servicing, Asia Pacific at BNY Mellon said,"It is a measure of the pace at which the reforms have taken place in China that MSCI is willing to show flexibility on the scheduling for inclusion. Clearly, the imminent launch of a Shenzhen (which represents a large chunk of China's equity market) Connect scheme is a key driver for benchmark inclusion, and its launch will likely see another reassessment later this year."
