Recent Flux in China’s Foreign Fund Flows Is Normal, MSCI Says
Xu Wei
DATE:  Jul 29 2020
/ SOURCE:  Yicai
Recent Flux in China’s Foreign Fund Flows Is Normal, MSCI Says Recent Flux in China’s Foreign Fund Flows Is Normal, MSCI Says

(Yicai Global) July 29 -- Big fluctuations in northbound trading, or foreign funds that are invested from Hong Kong into the Chinese mainland, is entirely normal, according to a senior official at leading stock market index provider MSCI.

Though many overseas investors are large institutions with long-term positions, they and individual investors also have short-term adjustment needs, Wei Zhen, head of China research at MSCI, said at a press briefing yesterday, The Paper reported today.

Foreign investors held CNY1.7 trillion (USD242.8 billion) worth of A-shares -- those listed on mainland stock exchanges -- as of mid-year, so short-term outflows of tens of billions are quite normal, Wei said.

The gradual inflow of foreign capital is in step with China advancing its market opening, Wei noted. If the country continues to improve access and resolve investor concerns, MSCI will add more A-shares to its benchmarks. If these were fully included in the MSCI Emerging Market Index, China stocks would make up about half of the catalog, MSCI’s research has found.

MSCI's current scheme to include A-shares in the flagship index have thus far reached fruition. It hopes China's regulators will resolve remaining market access issues in an effort to enable it to include the residual 80 percent of A-Shares, Wei said, addressing the company’s future plans.

The New York-based index compiler will launch a series thematic indexes based on A-shares within a year, Douglas Walls, head of index products for MSCI Asia Pacific, said yesterday.

Research and development of MSCI’s China indexes will first focus on stock-based ones this year to meet the needs of both international and domestic investors. This inquiry implicates four areas: themed investment, research into sustainable development, factor investment, and enhancing the market value-weighted, broad-based index, Walls said.

Editor: Ben Armour

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Keywords:   MSCI,China's Stock,Index