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Fund Times

MSCI Takes a Step to Bring China A-Shares Into the Fold

While the near-term impact of the change may be small, the long-term implications could be tremendous.

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This week's big news in index land was MSCI's announcement that it will include China A-Shares in its Emerging Markets Index. A total of 222 A-Shares will be added to the index as part of a two-step process that will begin in May 2018. The A-Shares to be included are large-cap stocks that are eligible for the Stock Connect programs. Upon completion, China A-Shares will represent approximately 0.73% of the value of the MSCI Emerging Markets Index.

In its press release, MSCI stated that its decision to include A-Shares was primarily a result of the positive impact that (1) the Stock Connect program and (2) the local Chinese stock exchanges' loosening of preapproval requirements that can restrict the creation of index-linked investment vehicles globally have had on the accessibility of the China A-market.

Jackie Choy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.