China shares barred from joining the mix of international peers
Mainland China’s stocks have been barred from mixing with their international rivals in the major share benchmarks for the third year in a row - damaging Beijing’s hopes to boost its foreign credibility in investment markets.
MSCI, the largest indexing firm in the world with more than $10 trillion in assets pegged to its indices, currently only includes Hong Kong and Chinese shares that are listed in overseas markets in its data.
Officials in China were pressing hard for mainland China stocks - which are worth some $6 trillion — to be included.
But despite MSCI hinting that might happen, including highlighting its work with Chinese regulators, it’s now decided Beijing will have to wait.
“International institutional investors clearly indicated that they would like to see further improvements in the accessibility of the China A-shares market before its inclusion,” Remy Briand, MSCI’s global head of research, said.
MSCI’s lingering concerns cover investors’ ability to move money to and from China stocks, and the enforcement of new rules about suspending shares.
China obviously disagrees - the view of director-general of international affairs for the China Securities Regulatory Commission, Qi Bin, is: “Theoretically of an international index is without this big market, it is incomplete.”
Analysts, however, reckon China’s inclusion is a case of when, not if: “MSCI is being prudent, but it is pretty clear what the direction of travel is here,” said Ben Laidler, global equity strategist at HSBC. “The liberalisation of the market will continue regardless of what MSCI does.”
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