Foreign investors bet billions on China blue-chips joining MSCI index

Foreign investors bet billions on China blue-chips joining MSCI index

"With or without the inclusion, China's stock market, and our capital market as a whole, will not alter its direction of reform toward market-oriented, law-governed and global development", said Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission.

That said, market participants expect the new weighting of Chinese A-shares in the MSCI Emerging Markets Index will be far below 1%, which means the amount of money flowing into Chinese equities because of its inclusion in the MSCI Emerging Markets Index will be much lower than the amount stated above.

The top Chinese securities regulator is cracking down on illegal stock market activity, handing out more fines over the first five month of the year than in all of 2016.

The current MSCI EM index can be turned into an "MSCI EM ex-China index", similar with those Asia ex-Japan indices in the markets.

The ETF closed up 1% Monday at $41.63, and the Vanguard FTSE Emerging Markets ETF (VWO) rose 0.7%, while the iShares China Large-Cap ETF (FXI) was up 1.4% and the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) was up 0.9%.

According to the Financial Times China's $US7 trillion A-share markets and its $US9.3 trillion domestic bond market (the world's second and third largest respectively) are off limits to most foreign investors "because governance problems dissuade index providers from including them in their benchmarks". It is a far smaller slice of the stock investment universe - about 10 percent.

Total turnover of stocks in the two indices shrank by 3.4 percent to 351 billion yuan (51.6 billion US dollars) from the previous trading day. "Not to mention that the inflows will take place in a slow process".

"Inclusion would be an important milestone for China's equity market and may trigger a short-term rally due to increased expectations of fresh liquidity entering the onshore market", she added.

Apple, Microsoft, Google, others, meet Trump on government overhaul
Facebook (FB.O) CEO Mark Zuckerberg was invited but could not attend because of a conflict, the company said. Mastercard Inc (MA.N) CEO Ajay Banga said his company wanted to assist with cyber security issues.

The views expressed are the views of the author, not necessarily those of Thomson Reuters. MSCI's decision is expected Tuesday after the close of USA markets.

The MSCI is set to decide on 20 June whether to include A-shares in the EM index for the first time, after choosing to put off the move past year.

If MSCI says "No", A shares may react with a 1 per cent decline, which is still "minor", the analysts said.

China's fourth attempt at cracking into MSCI Inc.'s benchmark share indexes comes with its best chance of success - and the least at stake.

The index on which the iShares MSCI Emerging Markets exchange-traded fund (EEM) is poised for some tinkering, but it is technical factors that may spell a pause for the ETF, one observer says.

On the other side, a few investment institutions hold more conservative views on the probability of MSCI's acceptance.

"The inclusion could bring about 60.7 billion yuan into the (A-share) market, but the impact would be limited if the inclusion does not happen", Haitong Securities wrote.

Related News:

  • Punjab waives farm loan, AAP says 'too little'

    Punjab waives farm loan, AAP says 'too little'

    He reiterated the commitment to provide free power to farmers but appealed to big and well-to-do farmers to give up power subsidy voluntarily.

    Technology CEOs urged to join Trump initiative

    The main agenda, at least on paper: talk through ways to modernize the government's technology infrastructure. Some technology executives have clashed with Trump over his decision to exit the Paris climate accord.
    Van rams Muslim worshippers in London, PM May condemns

    Van rams Muslim worshippers in London, PM May condemns "sickening" attack

    Police arrested the van's driver, but were trying to determine whether the collision was accidental or deliberate. The Met Police said extra police patrols were being deployed to reassure the public and those observing Ramadan.
  • Trump Condemns 'Brutality' of N. Korea Following Warmbier's Death

    Following the death of former North Korea detainee Otto Warmbier , President Donald Trump has spoke out on the tragedy. Washington had offered dialogue, but only on the condition that North Korea completely denuclearizes.
    Spotify Is Now Testing Sponsored Songs

    Spotify Is Now Testing Sponsored Songs

    It is not immediately clear how Spotify will charge the labels-whether it will be based on impressions, actions, listens, etc. If Sponsored Songs catch on and get implemented as a standard feature, they could be a serious boon to labels and artists.

    Did Amazon accidentally spark a bidding war for Whole Foods?

    If somebody could convince Wal-Mart Stores Inc CEO Doug McMillon to say he has no interest in buying WFM that could go a long way. One of the biggest obstacles that stopped Whole Foods from exploding in growth is the exorbitant prices of its products.
  • Britain's Labour Party says PM May has no authority before Brexit talks

    Britain's Labour Party says PM May has no authority before Brexit talks

    She said: "We want to see an administration set up again that will last and one that will last for all of the people of Northern Ireland".

    KD's clutch heroics push Warriors closer to National Basketball Association title

    The Cavaliers are no match for these Warriors, not even with arguably the best player on the planet in LeBron James . After the teams won a finals apiece over the last two years, the Warriors are primed to win the trilogy.
    Whole Food shares keep rising, leading to bidding war speculation

    Whole Food shares keep rising, leading to bidding war speculation

    Whole Foods , with Amazon backing, will expand brick and mortar much more quickly because of the financial power of Amazon . Amazon has made a huge splash and acquired organic supermarket chain Whole Foods for $13.7 billion .
  • Qatar Airways CEO sees no need for Boeing mid-market jet

    The three Gulf states and Egypt blocked access to Qatar's Al-Jazeera satellite news channel and other Qatari news websites. Later, a number of other countries also announced about severing diplomatic relations with Qatar.
    Man rams police vehicle in Paris; attacker likely killed

    Man rams police vehicle in Paris; attacker likely killed

    On Wednesday, the French government is to unveil a new anti-terrorism law, created to allow the state of emergency to be lifted. Previous major attacks targeted the Paris offices of the Charlie Hebdo satirical magazine in January 2015.
    Talks begin over British divorce from European Union

    Talks begin over British divorce from European Union

    He said that's essentially putting jobs and the economy ahead of immigration which is a contentious issue for Britain. The association represents 3,200 businesses with a million employees in Germany making industrial machinery.


Most liked

Family Says Otto Warmbier, American Released By North Korea, Has Died
American student Otto Warmbier is presented to reporters on February 29, 2016, in Pyongyang, North Korea, following his arrest. The China-based tour group said in a statement that despite constant requests, they were denied the opportunity to meet him.

Bernie Sanders Ally Tom Perriello Loses Virginia Gubernatorial Primary to Ralph Northam
Tom Perriello , speaks to supporters at an election night party at the State Theatre Tuesday, June 13, 2017 in Falls Church, Va. Ralph Northam easily won the Democratic nomination for governor of the southern state, besting challenger Tom Perriello .

Lions coach Farrell demands defensive lift in Dunedin
The Lions have made a statement that they are going to be competitive come Test match time and that's critical for our great game. You saw the style of the Lions against the Crusaders , they took the points that were on offer, almost.

Real president Perez "not contemplating" Ronaldo departure
He told Spanish radio station Onda Cero (h/t the Mirror's Joe Mewis ): "The clause for Cristiano is £1 billion". And according to Spanish sports daily Marca , Ronaldo has told his teammates: "I'm leaving Real".

Portugal vs Mexico: VAR not working well - Santos
After an explosive opening period, the second was a much tamer affair as both teams squandered half chances as the tempo dropped. Mexico's all-time top scorer grabbed his 48th worldwide goal from 93 appearances after some awful defending by Portugal .

Brexit negotiations have started
British chancellor Philip Hammond said he would not agree to a deal that would "destroy" Britain. The EU said it was also looking for a good compromise.

Conor McGregor V Floyd Mayweather Super-Fight: 5 Positives & 5 Negatives
The 12-round fight will be fought at 154 pounds and will mark a return to the ring for Mayweather after an nearly two-year layoff. Rumors and reports of a fight have been floating for nearly a year, with both fighters openly acknowledging a potential bout.

Democrats seek first big win of Trump era today in Georgia
The Dems want to stop tax cuts, good healthcare and Border Security .Their ObamaCare is dead with 100% increases in P's. In what's become the most expensive House race in history, both Democrats and Republicans have tons at stake.

Bank of England chief downplays chance of interest rate hike
The pound fell after the Bank of England governor said he did not think that now was the time for interest rates to rise. On Brexit, Hammond said the Conservative Party was committed to keeping taxes as low as possible to encourage growth.

English cardinal after mosque attack: 'Repudiate hatred and violence'
Vehicles have also been also used to attack the public on London's Westminster Bridge , in Nice, France, and in Berlin. Searches are being carried out at a residential address, where Mr Osborne is listed as living, in the Cardiff area.

US Federal Reserve hikes rates again as confidence in the economy grows
The Federal Reserve Chair Janet Yellen said: "our decision reflects the progress the economy has made and is expected to make". The pan-European FTSEurofirst 300 index ended down 0.3 percent and MSCI's gauge of stocks across the globe fell 0.8 percent.

Kluber fires 3-hitter as Indians blank Orioles 12-0
In the fourth inning alone, they tallied four doubles off Bundy, who had never allowed more than three doubles in an entire game. Jackson contributed a two-run double plus a bloop run-scoring single, and Santana added a two-run homer and a sacrifice fly.

Pakistan peaked at the right time, says Michael Hussey
Pakistan made sure it did not turn out to be a costly mistake, though, as Amir dismissed him with the next ball. From Fakhar Zaman to Hassan Ali and Shadab Khan, Pakistan has shown the world its rich talent and pedigree.

NSW Treasurer Dominic Perrottet announces budget's health funding
The government has allocated $7.7 billion over four years, with $1.5 billion in works allocated for the 2017-18 financial year. Budget delivered: NSW Treasurer Dominic Perrottet announced a surplus of $4.5 billion.

Sarfraz hopes lifting of coveted trophy ends Pakistan exile
Fakhar lofted Ravindra Jadeja over long-on for six and got to three figures by sweeping Ravichandran Ashwin to the boundary. India had three players, batsmen Virat Kohli and Shikhar Dhawan, together with seamer Bhuvneshwar Kumar, in the ICC team .