(Yicai Global) March 1 -- MSCI, the world's largest stock index provider, has decided to move forward with plans to increase the weight of Chinese mainland stocks in its indexes to 20 percent from 5 percent by the end of this year.
The change will take place over three steps, the New York-based firm said in a statement today (Beijing time). Once complete, MSCI indexes will include 253 large caps and 168 mid caps listed on the mainland, including 27 trading on the growth-orientated ChiNext board in Shenzhen, giving Chinese stocks a 3.3 percent weight on the pro-forma MSCI Emerging Markets Index, up from 0.7 percent.
These changes would lead to a USD67 billion fund inflow to the Chinese market this year, Gao Ting, Head of China Strategy at UBS Securities, estimated today.
Another investment bank, JP Morgan predicted a total of USD85 billion additional fresh cash inflow to the country, including about USD14.2 billion worth of passive inflow.
USB's Gao Ting predicted that the foreign investors as a group are likely to rival domestic mutual funds as the largest Chinese stock holder soon with the help of MSCI weight increase.
If China wants to increase its stocks' weight further in the indexes, there are still a number of issues the country needs to address regarding market accessibility, MSCI added.