May 14, 2018 / 11:37 PM / 5 months ago

MSCI to add 234 China A-shares to main indexes

SHANGHAI, May 15 (Reuters) - MSCI, the U.S. index publisher, said on Tuesday that 234 Chinese large caps will be partially included in its global and regional indexes on June 1, following an index review ahead of China’s inclusion in MSCI’s widely tracked equity benchmarks.

The review ejected nine companies and added 11 in the MSCI China A Inclusion Index, slightly altering the expected weighting that the Chinese stocks will have in MSCI’s emerging market index.

The 234 yuan-denominated stocks, or China A-shares, will represent an aggregate weight of 0.39 percent in the MSCI Emerging Markets Index at a 2.5 percent partial inclusion factor during the first step of the China entry. The second phase of the entry will take place in September.

The MSCI China A Inclusion Index is heavily weighted toward financials, consumer, and real estate.

Although much of the impact has been priced in already, the imminent China MSCI entry has rekindled interest in blue-chips recently.

Over the past two months, Chinese mutual fund houses have raised over 10 billion yuan through a dozen newly-launched funds that track MSCI’s A-share indexes, while April’s foreign inflows via the Shanghai-Hong Kong stock connect hit a monthly record.

MSCI said last June that Chinese stocks could initially present a 0.73 percent weighting in the MSCI EM Index at a 5 percent partial inclusion factor, with the inclusion to be completed in a two-stage process, on June 1, and on September 3.

MSCI’s latest announcement means the China A-share weighting would rise slightly to roughly 0.78 percent. (Reporting by Samuel Shen; additional reporting by Rodrigo Campos and Trevor Hunnicut in New York; editing by Richard Pullin)

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