Bloomberg A New York-based company is getting ready to make a call on China that will determine whether billions of dollars flow into the nation’s world-beating stock market. by Belinda Cao and Ye Xie
'The June 9 decision by MSCI Inc. on the possible inclusion of China’s
locally traded shares in the index-provider's equity benchmarks comes
after a year of consultation with banks and funds. MSCI is faced with a
situation where it’s getting harder to ignore the Chinese equity market,
already the world’s second-largest with a total value of more than $9
trillion. Yet for most international investors, mainland-listed stocks
remain out of reach due to limitations on their tradability.
own only 5.9 percent of the yuan-denominated A shares because of
regulatory restrictions even as the government moves to open up access
to the exchanges in Shanghai and Shenzhen. MSCI, whose emerging-market
gauge is tracked by $1.7 trillion of funds, could help change that.
a big deal,” Sebastien Lieblich, Global Head of Index Management
Research at MSCI, said by phone from Geneva. China’s market is
“relatively untapped,” and an inclusion would suggest it be “elevated to
be part of the major radar screen of international institutional
investors,” he said.'