MSCI adds China-listed stocks to index in long awaited move

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"Following the introduction of these major enhancements to the accessibility of the Saudi Arabian equity market, MSCI will be consulting with worldwide institutional investors to gather informed feedback on their practical experience of accessing the Saudi equity markets and in particular on the effectiveness of the recently implemented enhancements", the index provider said in a statement Tuesday.

Fund managers have welcomed MSCI's decision to include China's mainland domestic shares in its Emerging Markets and ACWI indices for the first time, saying the region is rich with "stockpicking opportunities" for active investors.

Although the initial impact of the additions would be "slight", Chenye said a "more balanced investor structure with a higher proportion of institutional investors (both domestic and overseas) will likely result in a change of investment style" in the domestic markets.

State Street Global Advisors head of investments for Asia Pacific, Kevin Anderson, said that long-term thinking will be essential for investors - whichever pathway they choose.

Finally, the decision on the potential removal of the Nigeria index from the Frontier Markets index has been delayed to November 2017 to allow more time for worldwide institutional investors to better assess the effectiveness of the new FX trading window introduced by the Central Bank of Nigeria.

Global equity index provider MSCI will add China A shares to two of its indices starting June 2018. The blue-chip CSI 300 index shook off early profit-taking to end up 1.2 percent at 3,587.96 points, its highest close since December 31, 2015.

On Wednesday, the company said China had made enough progress in opening up its markets for MSCI to add a selection of 222 large-cap stocks. "However, we realise that many quality A-share companies in growing industries can be priced at very rich valuation multiples".

MSCI says it will be gradually adding China A shares into its indexes.

The stocks, which would represent a weighting of just 0.73 percent in the benchmark, will be included via a two-phase process in May and August next year.

Chinese stocks had been knocked back for inclusion by MSCI for three years running and the decision had been widely expected - though that didn't stop Chinese shares gaining.

China's exchanges have also loosened pre-approval rights on financial products linked to A shares, MSCI said, and the index company is addressing the concern about trading halts by making companies that have suspended their shares for more than 50 days in the past 12 months ineligible for inclusion.

China had failed on three previous occasions to be included by MSCI, with the US-based firm citing China's restrictions on market access and on moving capital in and out of the country.

"It's really in the hands of the Chinese stakeholders, they are dictating the timing".

Lieblich did not give a timeline and criteria for further inclusion of A-shares, which could involve mid-cap stocks.

"We are happy to see it", Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission, said in a statement on the agency's website. MSCI said it'll initially only count 5% of the free-float market capitalization of the selected companies, which will together have a weighting of 0.73% in the emerging-markets index.

While the CSI300 lagged a global stock rally earlier this year, it had surged almost 8 percent since mid-May, partly on expectations of the MSCI decision.

Seoul shares will shrug off an outflow of few trillion won, analysts said, as the total market capitalization of stocks listed on the benchmark main Korean Composite Stock Price Index (KOSPI) .KS11 reached 1,536 trillion won as of closing on June 20.

The decline, however, would be "transient", though the MSCI's decision is clearly "unfavorable" to Korean markets, Ko Seung-hee, a strategist at Mirae Asset Daewoo, wrote in a report.