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MSCI explains next steps for China A-share inclusion

A-shares included at low weight; handful of large-caps with tiny weighting.

MSCI’s decision in June to include Chinese domestic A-shares in its biggest international and emerging market indices, albeit in modest scale, was a symbolic landmark. But attention has quickly turned to the next step: increasing the weighting of Chinese shares to represent the true size of that market.

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Chin Ping Chia,
MSCI

The inclusion of A-shares, which will take place in two instalments in May and August 2018, will be in a very limited form – just 222 large-cap stocks with a 5% weighting relative to their actual size. 

Consequently they will represent just 0.73% of the MSCI EM Index, compared with the 27% of the index already accounted for by China-linked stocks listed in Hong Kong and New York. 

Full inclusion of A-shares at their actual market weight would account for about 20% of the emerging market index.

Euromoney asked the MSCI research team of Sebastian Lieblich and Chin Ping Chia about the next steps: towards greater weighting and towards the inclusion of mid-cap stocks rather than just large-caps.

“Looking at mid-caps and possibly going beyond 5% – these are not mutually exclusive.