On Friday, global stock index compiler MSCI will add over 200 Chinese A-shares to its Emerging Markets Index, giving passive investors from around the world access to Chinese companies from sectors across the board.
Traders and fund managers who use MSCI’s indices for their tracker funds will now need to buy yuan-denominated stocks for the first time. Big Chinese brands from the pharmaceutical, real estate, and banking industries will be available, as Bloomberg sets out.
Despite China’s position as the world’s second-largest equity market, however, the initial effect of Friday’s launch is expected to be small. The A-shares will only occupy a 0.39% weighting at first on the Emerging Markets Index, with further inclusions due in September.
Several companies have been dropped from the shortlist following trade suspensions or other legal issues, most notably ZTE Corp. and China Railway Group.