(Yicai Global) May 30 -- MSCI does not expect to add frequent, small batches of Chinese mainland shares to its Emerging Markets Index once the so-called A-shares are included in the benchmark, according to MSCI’s chief executive.
Future adjustments will hopefully involve a larger percentage of mainland shares, Henry Fernandez said during a press briefing in Beijing yesterday. There is no timetable to introduce more mid-cap stocks from Shanghai and Shenzhen, he added, saying it is tough for foreign institutions to research many Chinese companies.
Mainland shares, also known as A-shares, will make their first appearance in the Emerging Markets Index on June 1, an insider from the New York-based firm told Yicai Global. Around 230 companies, mostly big-caps, will enter with an Index Inclusion Factor of 2.5 percent of their market cap in the MSCI China Index. In September, the IIF will double, giving the A-shares a corresponding weight of 0.73 percent throughout the Emerging Markets Index.
MSCI decided to include so-called A-shares in the Emerging Markets Index last June, giving international investors better access to Chinese shares. Swiss banking group UBS expects a boost of about USD18.5 billion into mainland stocks during the first phase, with more money pouring in after the first adjustment.
MSCI launched the Emerging Markets Index in 1988 and the benchmark now tracks 24 countries, representing 10 percent of world market capitalization.
Editor: James Boynton