Capital controls, regulatory extraterritoriality and unique local market practices. According to the Financial Times, when listed that way, the reasons mainland Chinese shares failed to win MSCI inclusion make the decision look less close-run than many had thought it would be. Underlying it was a message from the index provider and international investors to Chinese authorities: we want proof you will do what you say you will. MSCI’s decision to hold off adding the world’s second-largest market to its globally followed indices also highlights a split between investors based in or near China who were expecting inclusion, and the global managers whose reservations swayed the index provider’s thinking.
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