BEIJING, Sept. 1 (Xinhua) -- FTSE Russell, a leading global index provider, announced adjustments to constituents of its FTSE China indices in the latest quarterly review, reported Securities Times on Wednesday.
The company will add EVE Energy (300014.SZ), PetroChina (601857.SH) and Shaanxi Coal Industry (601225.SH) to the FTSE China A50 Index while Anhui Conch Cement (600585.SH), China Pacific Insurance (Group) (601601.SH) and Zhangzhou Pientzehuang Pharmaceutical (600436.SH) will be deleted from the index.
The FTSE China A50 Index represents the 50 largest A-share companies in China and is tracked by domestic investors and internationally through a range of QFII and Stock Connect investment portfolios.
Several changes were also made to other indices in the comprehensive FTSE China Index Series which consists of over 260 indices covering A shares, B shares, H shares, red chips and P chips.
Historically, adjustment to constituents of the FTSE China indices was caused by changes in market capitalization of the constituents and the new additions such as Shaanxi Coal Industry (601225.SH) all posted better performance than the deleted ones.
Usually, the adjustment will draw in plenty of overseas passive investment. To reduce the difference between their position composition and the composition of underlying stocks tracked by the FTSE China indices, overseas investors often adjust their positions on the last trading day before the date when results of the review take effect.
Later from the start of trading on September 19, all the changes will be made effective and by then, turnover of related China stocks is likely to rise significantly.
Currently, overseas investors are still in the initial stage of A share allocations and the trend for them to follow up is unlikely to change over the long run, according to analysts with Northeast Securities.
Moreover, in terms of securitization rate, that for A shares stays below 60 percent at present therefore there is a rather long time for overseas capital flows into A shares to end, the report said. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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