MSCI is considering lifting the weight of China A shares in its Emerging Markets Index, by lifting the free-float-adjusted market value to 20% from 5% for mainland stocks. The inclusion would occur in two stages in 2019. MSCI is also looking to make equities listed on the tech-heavy ChiNext board eligible from next year, and mid-cap stocks from 2020. Currently the pro forma index weight of China A shares in the MSCI Emerging Market Index is 0.71%, including a total of 235 large cap stocks. With the potential increase of inclusion factor, the pro forma weight of China A shares would further increase to 3.4%, resulting in a total number of A shares securities over 400. The significant lifting of China A shares weighting and the number of stock inclusion are expected to boost investors’ confidence, and post a long term positive impact on China stock market as well as to stabilize the Hong Kong stock market.
HK Economic Journal