Beijing has been pushing hard for its domestic stock market to be included in influential index provider MSCI’s global emerging-market indexes, a move that would see a big increase in flows into mainland A-shares. It was rebuffed again last year.

The Chinese authorities appears to have accepted that the move may take longer than it previously hoped for. If it happened, this would be another huge step in the international opening of the mainland’s capital markets.

Will China’s A-share equities be included into MSCI’s global emerging market indices?
Answer: No

MSCI’s decision to prevent China’s A-shares from being included into its emerging-market index for the third consecutive year is unprecedented, said Wang Qi, chief executive of private equity firm MegaTrust Investment (HK).

He should know—he was the former head of MSCI’s China equity research for almost two years till April 2015.

“After last year’s rejection, this year’s decision (expected in June 2017) will be even more of a wild card. We are confounded,” he told AsianInvestor.

MSCI said it delayed the inclusion once more, in part because investors need time to assess the effectiveness of policy changes on the quota allocation and capital mobility.

Inclusion would seem more likely than ever this year, given steps that have been taken since to open access to China’s stock markets.

The Shenzhen-Hong Kong Stock Connect programme launched in December, granting offshore institutional investors access to almost 80% of the market capitalisation of listed A-shares, with the only limitation being daily quotas.

Global passive managers continue to operate A-share ETFs with no apparent issues, and there are high-profile entries to the Chinese asset management industry through wholly foreign owned enterprises—all signaling that global investors are willing and ready to participate in this market

But after spending years trying to convince the US index provider to include its onshore shares, the country appears less enthused of late. China Securities Regulatory Commission vice chairman Fang Xinghai said in Davos on January 19 that the country’s authorities were not in a hurry to push A-shares to be included into MSCI indices.

Multiple China market experts say the change in mindset reflects a desire to both manage its long pipeline of new listings, and slow the internationalisation of the stock market to prevent disturbance of its financial market. A market opening will always come second to domestic control.

Other predictions for the Year of the Rooster:

Will there be any major blowups in the ETF industry?

Which investments will perform best this year?

Will more countries vote to leave the European Union?

Will the Bank of Japan be forced to rethink its 10-year bond yield target?

How many rate hikes will the US make this year?

Will Donald Trump spark a trade war with China?