Global index, data and analytics provider FTSE Russell announced Thursday that China's A Shares market will be promoted to Secondary Emerging market status.
"FTSE Russell is pleased to announce that the China A Shares market will be promoted to Emerging Markets status and included in FTSE's global equity benchmarks from June 2019. China will also be added to our Watch List for possible inclusion in FTSE's global bond indexes," said FTSE Russell CEO Mark Makepeace.
Since the addition of China's A Shares to the FTSE Watch List, FTSE Russell has evaluated the ongoing initiatives of Chinese authorities to improve global investor access through market reforms. Through these improvements and recent enhancements to the Stock Connect, China A Shares now meet the requirements for classification within the FTSE Emerging Index, according to FTSE Russell.
"We are delighted to mark the inclusion of China A Shares in FTSE Russell's global benchmarks. The promotion of China A Shares to Emerging market status within FTSE GEIS is an important next step in the development of our capital markets and reflects the long-term reforms that have been implemented over the past few years," said Fang Xinghai, vice chairman of China Securities Regulatory Commission.
"We will work closely with FTSE Russell over the coming months to effect a smooth transition of this market into the global indexes." FTSE Russell will begin including China A Shares securities into the FTSE GEIS from June 2019.
To assist index trackers in their ability to efficiently replicate the underlying benchmark change, FTSE Russell intends to implement the inclusion over three separate tranches through to March 2020. After each tranche, FTSE Russell will seek market feedback to evaluate the ability of the market to absorb the additional assets.
According to FTSE Russell, upon completion of the first phase, China A Shares are expected to constitute about 5.5 percent of the total FTSE Emerging Index, representing initial net passive inflows of 10 billion U.S. dollars of assets under management.