Mainland stocks edge up on MSCI inclusion hopes

Chinese mainland stocks nudged higher on Monday after the MSCI head said they could increase its weighting of the mainland’s A shares.

The benchmark Shanghai Composite Index added 0.87 percent, ending at 3,185.44 points, while the smaller Shenzhen Component Index gained 1.65 percent, closing at 10,537.59 points.

The blue- chip CSI300 index settled up 1.25 percent at 3,668.09 points, the highest close in 18 months.

MSCI is considering raising current 5 percent partial Inclusion Factor and adding more A shares into its Emerging Markets Index ( EMI) in the future, MSCI CEO Henry Fernandez said in an interview with the Shanghai Securities News on Sunday.

Based on the Inclusion Factor, the US index provider had decided to include 222 mainland large- cap stocks into the EMI with the inclusion process starting June 2018. This will eventually give the Chinese mainland a weight of 0.73 percent in the EMI.

MSCI will likely choose to add 195 mid- sized A shares into the EMI, according to the Shanghai Securities News report on Monday.

“For now, we are optimistic about the [ A- share] market, which has been picking up recently, aided by better policy and liquidity conditions,” analysts from Haitong Securities wrote in a Reuters report on Monday.

The high- speed railway- related stocks were among the top performing sectors, as the first China- standard bullet train, dubbed as “Fuxing,” hit the road Monday morning.