(Yicai Global) Nov. 26 -- MSCI's lifting of the inclusion factor for Chinese large-cap A-shares may bring a potential net passive inflow of USD5.8 billion into the A-share market, UBS Securities China Equity Strategy team has estimated, the company said today.

MSCI will raise the inclusion factor for large-cap domestically-traded A-shares to 20 percent from 15 percent and include mid-cap A-shares in its global indexes with an initial inclusion factor of 20 percent today after markets close.

UBS set the target for the CSI 300 Index, the benchmark for the A-share market, as 4,400 for next year's end. This means the index will rise 14 percent from the current level, which implies a trailing price-earnings ratio of 12.1x.

UBS' Chinese market upside will be mostly driven by earnings growth with minimal multiple expansions, the firm said.

Editor: Ben Armour