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MSCI lifting inclusion factor of A-shares likely to bring over USD35 bln fund, analyst

November 13, 2019


Abstract : MSCI's lifting inclusion factor of large cap A-shares and one-time 20 percent inclusion of middle cap A-shares in MSCI Emerging Markets Index is likely to bring about 35-40 billion U.S. dollars of capital for A-share market, predicted Bai Haifeng, fund manager with China Merchants Fund.

BEIJING, Nov. 13 (Xinhua) – Global index compiler MSCI's lifting inclusion factor of large cap A-shares and one-time 20 percent inclusion of middle cap A-shares in MSCI Emerging Markets Index is likely to bring about 35-40 billion U.S. dollars of capital for A-share market, predicted Bai Haifeng, fund manager with China Merchants Fund.

MSCI previously announced that it will raise the inclusion factor of large cap A-shares in its emerging markets index from 15 percent to 20 percent and include for one time middle cap A-shares, including qualified Growth Enterprise Market (GEM)-listed shares into the emerging markets index by a 20 percent inclusion factor.

The adjustments were scheduled to be effective after the closing on November 26 this year and were forecasted to bring about respectively 20 billion U.S. dollars and 17 billion U.S. dollars of capital for A-share market.

By then, there will be 244 large cap A shares and 228 middle cap A-shares or qualified GEM-listed shares to be included in the MSCI Emerging Markets Index.

Together with previous inclusions, weightings of China's A shares in the MSCI China Index and MSCI Emerging Markets Index will reach 12.1 percent and 4.1 percent respectively by November 26.

According to Bai, the previous round of price adjustment sent assets valuation in major countries worldwide to relatively high levels alongside mounting risks thus the expected quantitative monetary policy adjustment is likely to drive capital into assets with low valuation, such as the A-shares which will attract continuous capital inflow. (Edited by Duan Jing, duanjing@xinhua.org)

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Keyword: A-share MSCI inclusion factor

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