MSCI adds more mainland China stocks (A shares) to its indexes

Finance


Despite global trade and tariff tensions, one of the world’s biggest indexers is pushing ahead with plans to include mainland China stocks in its indexes. That means investors in most global funds will be owning more China stocks in the next few years.

It couldn’t come at a better time for China. The trade wars have been brutal on the country’s stock market, with the Shanghai exchange, the nation’s largest, down 17 percent in 2018. China’s stock market boosters would love the additional investment from foreign investors to help them in a difficult year.

“The mainland China stock market is mostly owned by retail investors, so it is very driven by sentiment,” said Brendan Ahern, who runs the KraneShares MSCI China A Shares ETF, a basket of mainland China stocks (known as “A Shares”). “Those retail investors are really worried about trade wars, so this foreign investment will help institutionalize the market and slowly make it more dominated by professional investors.”

MSCI on Friday initiates the second leg of its multiyear plan to incorporate China mainland stocks into its global stock indexing system. Active and passive managers use MSCI to determine their investment universe. Many index funds and ETFs are directly benchmarked to MSCI indexes. The widely followed indexes are used as benchmarks for many global ETFs and mutual funds, including the Emerging Markets ETF and the iShares MSCI All World ETF.

At the close of the market, indexers are going to have to buy mainland China stocks and sell those from other parts of the world.



Source link

Products You May Like

Articles You May Like

Kylie Jenner’s former Calabasas, California home on the market
Which business book is Bill Gates recommending to colleagues?
Inside tidying expert Marie Kondo’s work-from-home routine
Nominate someone who has been a local hero during coronavirus pandemic
Bill Gates recommends movies and TV shows ‘for when you need a break’

Leave a Reply

Your email address will not be published. Required fields are marked *