Wed, May 15, 2019 - Page 10 News List

MSCI boosts China, adds Saudi Arabia to indices

Bloomberg

Twenty-six China A shares are to be added to the MSCI China Index, while 30 equities from Saudi Arabia and eight Argentine securities are set to join the MSCI Inc’s emerging-market stocks benchmarks, in steps that could potentially draw billions of dollars of investor inflows.

MSCI said the stocks are to join its indices as of the close of trading on May 28.

Argentina is to account for 0.26 percent of the MSCI Emerging Markets index, while Saudi Arabia would have a 1.42 percent weighting.

China A shares are to have a 1.76 percent weighting in the broad developing-nation gauge, it said.

The China gauge would have 31 additions in total, including five that are not A shares.

MSCI is the world’s biggest index compiler and its emerging-markets index is the most important for the asset class, with as much as US$1.8 trillion in assets benchmarked to it as of June last year.

The shares are being added at a time when developing-nation assets are in the midst of a sell-off tied to increased US-China trade tensions, with Chinese shares in particular in the firing line.

MSCI is to increase the inclusion factor of large-cap A shares to 10 percent from 5 percent, according to the statement, though that does not guarantee a boost for the market: the initial inclusion of A shares last year did little to stop the worst rout in a decade.

Inflows from index-tracking funds are minor compared with the size of China’s market, which is dominated by retail investors.

Recent volatility in Chinese shares would not have an impact on MSCI’s plans to raise the weighting of large-caps this year, MSCI director of China research Zhen Wei (魏震) said.

However, it could mean a change in the number of mid-caps that are included in the November review, he said.

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