MSCI adds China A-shares to EM index

Chinese A-shares are to be included in the MSCI Emerging Markets index following the latest review of the benchmark.

MSCI said it would include A-Shares in its Emerging Markets and ACWI indices from June 2018. Some 222 large-cap Chinese stocks are to be added to the former, representing a 0.73 per cent weight.

Last year MSCI opted to delay inclusion, citing remaining investor concerns about issues including market accessibility.

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However China has since attempted to make its markets more attractive to foreign investors, with MSCI and market participants appearing to warm to this.

"International investors have embraced the positive changes in the accessibility of the China A-shares market over the last few years and now all conditions are set for MSCI to proceed with the first step of the inclusion," said MSCI managing director Remy Briand.

The index provider said any further inclusion of A-shares would be subject to "a greater alignment" of the Chinese market with international accessibility standards, the relaxation of daily trading limits and continued progress on trading suspensions.

Other factors including the resilience of its Stock Connect system and further loosening of restrictions on the creation of index-linked investment vehicles could also play a role.

In the results of its latest classification review, MSCI delayed the inclusion of Argentina and Nigeria in its Emerging Markets index. The firm will also consult on the possibility of including Saudi Arabia in its next review.