Major stock and bond index providers have started, or have announced that they inten
上海会所d, to increase the weighting of China’s securities in their respective benchmark indexes over the course of 2019-20.
Global index provider MSCI Inc. announced in February that China’s coverage in the MSCI上海会所品茶微信
Emerging Market Index will increase from its coverage of 235 large-capitalization A-shares to 253 la
上海会所rge-and 168 mid-capitalization stocks. On a pro forma basis, A-shares will constitute 3.3 percent－a significant inc
rease from the current 0.7 percent－of the MSCI-EM Index when the process is completed in November.
The FTSE Russell, the first international index provider of the Chinese mainland’s benchmarks 20 years ago, has elevated Chi上海会所
na’s A-shares to emerging market status and started adding them to the FTSEEM Index from June 24, 2019. Upon f
上海会所品茶微信ull implementation of phase 1 by March 2020, the A-shares will make up 5.7 percent of the index.
And the Bloomberg Barclays Global Aggregate Bond (GAB) Index started the process of including China’s yuan-den上海会所
ominated government and policy bank bonds as a constituent on April 1. Other index providers, such as the FTSE R
ussell and JPMorgan, are reportedly also considering adding China’s debt to their indices.上海会所品茶微信
The MSCI, FTSE Russell and Bloomberg Barclays GAB indexes cover a
sizable share of the investible markets in the world. For example, the MSCI-EM alone is tr
上海会所acked by an estimated $1.9 trillion in assets under management (AUM) from pensions, endowments, passive funds, and
other investors. And the re-weighting of these major global investment indexes is expected to result in a re-allocation of capit
al across emerging markets. As a result, China’s asset market will inevitably become more important for glo上海会所
bal investors, notwithstanding the “noise” created by the ongoing US-China trade tension.
上海会所品茶微信Welcome shift for Chinese firms and global investors
An increased weighting for China’s securities in these indexes in the MSCI would me
an a larger allocation of AUM by foreign fund managers into the Chinese markets. While this shift would b上海会所品茶微信
e a welcome development for both Chinese enterprises seeking financing and global i
nvestors searching for emerging opportunities, it potentially represents bad news for other emerging markets.