MSCI seeks feed­back on adding Chi­nese shares to in­dex

New Straits Times - - Business -

NEW YORK/HONG KONG: Global in­dex provider MSCI Inc was seek­ing feed­back from mar­ket par­tic­i­pants on whether to add Chi­nese shares to a widely tracked in­dex, a move which could trig­ger bil­lions of US dollars in cap­i­tal in­flows into main­land stocks and ease pres­sure on its yuan cur­rency.

MSCI did not add Chi­nese shares to its Emerg­ing Markets In­dex for a third year run­ning, last year, cit­ing con­cerns on share sus­pen­sion rules and monthly lim­its on repa­tri­at­ing cap­i­tal.

The emerg­ing in­dex is tracked by US$1.6 tril­lion (RM7 tril­lion) in global as­sets.

In a pre­sen­ta­tion posted on its web­site, MSCI high­lighted the con­cerns raised last year, the steps China had taken to ad­dress those ques­tions and key dis­cus­sion points posed to in­vestors.

China has re­moved quota lim­its on its land­mark stock con­nect pro­grammes be­tween Hong Kong, Shen­zhen and Shang­hai, and cut the num­ber of shares that were sus­pended to lev­els seen be­fore a mar­ket crash in mid-2015.

Hong Kong and China shares pulled off lows on ex­pec­ta­tions that the new pro­pos­als, which would in­clude large-cap stocks but ex­clude dual-listed shares among oth­ers, would be more ac­cept­able to global in­vestors.

If the pro­posed new rules are ap­plied, the num­ber of Chi­nese stocks that would have to be in­cluded would drop by two-thirds to 169 stocks, lead­ing to a sharp drop in mar­ket turnover, a cru­cial source of costs for pas­sive funds.

MSCI would also take a de­ci­sion on whether to re­clas­sify the Ar­gentina in­dex as an emerg­ing markets in­dex. Reuters

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