Two fund companies, China Merchants Fund and China Southern Asset Management Co., yesterday officially issued their new products for the MSCI China A Inclusion Index Funds which will be tracked at the MSCI China A Inclusion Index.
As of the press time, seven Chinese fund companies handed in their applications for their MSCI China A Inclusion Index funds to Chinese authorities.
The MSCI Inc. (NYSE: MSCI), a leading provider of research-based indexes and analytics, announced that a proportion of 2.5 percent of the China A-shares will be included in the MSCI Emerging Markets (EM) Index from June 2018.
MSCI indicated that the direct and indirect capital tracking of the MSCI indexes had hit 11 trillion dollars (as of the end of 2017, the public offering of the fund in China had achieved 11.65 trillion yuan).
The inclusion of China A-shares into the EM Markets will exert a positive influence to Chinese share markets, as in the short-term, it will give momentum to the China A-shares market, while in the long-term, it will encourage more foreign investors to allocate their assets in the China A-shares market proactively.
Furthermore, the investor's structure, the investing mindsets of Chinese investors and the market mechanisms in China will be transformed and internationalized, Baihai Feng, the fund manager of The China Merchants MSCI China A Inclusion Index Fund, told this journalist.
Bai noted to the CFbond.com that the MSCI China A Inclusion Index tracking 233 A-shares. It is more concentrated in certain industries. The financial, industrial and consumer sectors accounted for 51.50 percent of total numbers of shares, a figure much higher than 40.81 percent in the CSI 300.
China Merchants Fund expected a range of 17 billion to 18 billion dollars' inflow from abroad in the short-term and expected to reach 340 billion dollars in the long-term.
Luowen Jie, a fund manager from the China Southern Asset Management Co., said to this journalist, the inclusion of China A-shares into the EM Index this year will bring 80 billion yuan and approximate 1.8 trillion yuan overseas in the long-term when all of the China A-shares will be included.
According to the statistics from MSCI, the global funds tracking of the MSCI EM Index amounted to 1.6 trillion dollars in 2017.
The Southern Asset Management company estimated, based on an annual growth rate of 25 percent, that China A-shares will account for 18 percent in the EM index till all of them are included, 72 billion dollars will be invested in shares of the MSCI China A Inclusion Index each year.
The China Merchants MSCI China A Inclusion Index Fund is an ordinary index fund while the Southern MSCI China A Inclusion Index Fund is an Exchange Traded Fund (ETF).
The 233 shares in the MSCI China A Inclusion Index has represented the blue-chip stocks in the Chinese shares market with undervalued and high yield features, Luo noted. He added that foreign capital inclined to valuable, stable and long-term investments, primarily focused on companies' financial performance and management, which is in accordance with the features of these 233 shares.