In the video below, Jack Lin, managing director and head of APAC Client Coverage for MSCI, shares his perspective on the journey to China A shares inclusion in the MSCI Emerging Markets Index, and encourages further discussion among key stakeholders at the MSCI China Conference on June 13th in Hong Kong.
The process of inclusion of China A shares in the MSCI flagship indexes was a long but historic one, involving many market participants from China and across the globe. The decision to include A shares was a result of extensive global consultation with overwhelming support from a large number of international institutional investors, including asset owners, asset managers, broker/dealers and other market participants worldwide.
Increasing the weight of China A shares in the MSCI Indexes from its initial level of 5% to 20% in a three-step process throughout 2019 is a far-reaching development for the industry. In a full-inclusion scenario, for example, China A shares and other stocks in general will account for nearly half of the MSCI Emerging Markets Index. Further increase beyond 20% would require Chinese authorities to address the accessibility concerns in future.
Given the challenges investors face today, the China A inclusion into emerging market equities may provide a new frontier.