MSCI Inc is cutting dozens of Chinese companies from its global benchmarks, after many stocks tumbled as the market erased trillions of dollars in value.
The index provider is removing 66 companies from its MSCI China Index in its latest quarterly review, the highest tally in at least two years.
The changes, effective as of the close on Feb. 29, also apply to the MSCI All Country World Index.
Photo: Reuters
Stocks to be cut include property developers Gemdale Corp (金地) and Greentown China Holdings Ltd (綠城中國), as well as China Southern Airlines Co (中國南方航空) and Ping An Healthcare and Technology Co (平安健康互聯網).
The removals come as China’s weighting in global portfolios slumps amid worries about its struggling property sector and weak consumption, and as alternatives such as India become more prominent.
In a sign of the deep pessimism about the China and Hong Kong stock markets, equity rallies spurred by a slew of policy support measures last week faded within a few sessions ahead of the Lunar New Year break.
“It highlights the issue of negative flows for Chinese stocks as investors reduce exposure to the country, in large part due to recent weak fundamentals, but also fears of ongoing financial instability, regulatory uncertainty, and — most of all — country risk,” Capital.Com Inc senior analyst Kyle Rodda said.
“Some investors may also be forced to liquidate because of losses already incurred or because certain companies no longer fall within investment mandates,” he added.
Three stocks are to be deleted from the Hong Kong index as well: Budweiser Brewing Co APAC Ltd, New World Development Co (新世界發展) and Xinyi Glass Holdings Ltd (信義玻璃控股).
Index-hugging funds will have to purge these stocks from their portfolios. There is at least US$5.9 billion in exchange-traded funds tracking the MSCI China Index, the largest of which is the US-listed iShares MSCI China ETF, according to Bloomberg-compiled data.
The news was not all about cuts, though. Five components are to be added to the MSCI China Index, including electrical-appliance maker Midea Group Co (美的集團) and skin-treatment company Giant Biogene Holding Co (巨子生物).
Still, the high number of deletions could weigh as Hong Kong resumes trading today. MSCI takes a number of factors into account for including stocks in its standard indices including market capitalization, free float and extreme price increases.
“The deletion list of Chinese companies, spanning across a wide range of sectors from technology, property and retail to healthcare, solidifies the perception of systemic-based concerns over the world’s second-largest economy,” IG Markets Ltd analyst Hebe Chen (陳碧菲) said.
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
UNCERTAINTIES: The world’s biggest chip packager and tester is closely monitoring the US’ tariff policy before making any capacity adjustments, a company official said ASE Technology Holding Inc (日月光投控), the world’s biggest chip packager and tester, yesterday said it is cautiously evaluating new advanced packaging capacity expansion in the US in response to customers’ requests amid uncertainties about the US’ tariff policy. Compared with its semiconductor peers, ASE has been relatively prudent about building new capacity in the US. However, the company is adjusting its global manufacturing footprint expansion after US President Donald Trump announced “reciprocal” tariffs in April, and new import duties targeting semiconductors and other items that are vital to national security. ASE subsidiary Siliconware Precision Industries Co (SPIL, 矽品精密) is participating in Nvidia
RSS