June 05, 2015

"Being added to MSCI’s indexes would mark the integration of China’s locally traded stocks into the world’s financial markets after being largely off limits to foreigners until recently."

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.

'Foreigners 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.

'“It’s 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.'

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