A healthy bourse needed to drive long-term growth
For Chinese investors who have been expecting introduction of more international institutional investors to boost the domestic stock market, it is disappointing thatMorgan Stanley Capital International has again delayed adding Chinese shares to its benchmark emerging markets index.
Oneyear after lastsummer’s stock crash, Chinese shares are still struggling tohave a solid foothold. But the poor performance of theChinese stockmarket should not bemade anexcuse todeny its long-term significance to both theChineseeconomyandinvestors at homeandabroad.
Inretrospect, it seems wise forMorgan Stanley tohave deferred inclusion ofChinese A-shares in one of itskey indices last Junejust as thebenchmarkShanghai Composite Index peaked at 5,178.19. Withthe Shanghai index still struggling below 3,000nowadays, anearlyMorgan Stanleynodwouldhavedonelittle toChina’s integration into the globalmarket by prematurely exposing global investors to the tumult ofChina’s stockmarket.
Yet a move to make Chinese stocks a bigger part of the global portfolio is inevitable.