China's A-share market is expected to see initial net passive inflows of 10 billion U.S. dollars due to its inclusion into the FTSE Russell's global equity benchmarks on Thursday.
FTSE Russell, owned by the London Stock Exchange Group and the second largest global index provider next to the US-based MSCI, said in a press release on its website that it will promote China's A-share market to the Emerging Markets status, a third classification other than the Developed and Frontier.
Meanwhile, it will begin the first phase of the process to include China's A-shares into the FTSE Global Equity Index Series (FTSE GEIS) from June 2019.
The first phase of the inclusion will be divided into three separate tranches, after which A-shares are expected to be weighted at 5.5 percent of the total FTSE Emerging Index, an index within the FTSE GEIS where A-shares are organized.
The weight represents the initial net passive inflows of 10 billion U.S. dollars of assets under management for China's A-share market, said the press release.
Stock inclusion will be calculated using 25 percent of the investable market capitalization of the eligible large, mid and small cap designated securities from the FTSE China A Stock Connect All Cap Index (currently around 1,250 stocks), said the press release.
According to the analyses from China's GF Securities, the A-shares included in the first phase will focus on the large and mid cap.
Sectors such as the manufacturing products and services, banking, food and beverage, healthcare, and technology account for a relatively high percentage in the FTSE China A Stock Connect All Cap Index, said GF Securities.
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