China’s A-share market is expected to gain more exposure to foreign investors as two world-leading stock market index providers scramble to include it in their core indices, the Securities Daily reported Tuesday morning.
Three months after the official inclusion of 226 A-share stocks in its emerging markets index on June 1, the U.S.-based stock market index maker Morgan Stanley Capital International (MSCI) nearly doubled the weight of the A-share market in the above-mentioned index from 0.39 percent to 0.75 percent by adding ten more A-share stocks to the index on Monday, a move that is projected to bring over USD 10 billion of foreign investments to the A-share market.
Concerned about the threat from the MSCI to its global competitiveness, the British index giant FTSE Russell, one of the MSCI’s major rivals, is also mulling over the addition of the A-share market to its core index.
According to Mark Makepease, CEO of FTSE Russell, the company will make a decision on whether to do so this month. He also suggested recently that the company is likely to assign more weight to the A-share market than what the MSCI had assigned if it decides to include the market.
Analysts believe that the inclusion of the A-share market in these world-famous indices, which are closely followed by investment managers around the globe, will undoubtedly propel the internationalization of the market.
Liu Xiangfeng, a researcher at the Macro Economic Research Institute under the National Development and Reform Commission (NDRC), said that with more and more foreign funds pouring into the A-share market, investors in the market would gradually shift away from the existing short-term speculative investment strategy and adopt the long-term value-oriented ones.
Xu Yang, an analyst from the TopCJ, a Hangzhou-based financial information provider, estimated that the inclusion of the A-share market in the FTSE Russell would attract USD 500 billion of foreign funds to the market.
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