MSCI considers increasing Chinese share weight in its indexes

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Investors stand in front of an electronic stock board at a securities brokerage in Shanghai, China, on May 30, 2018.  

Global index provider MSCI said it will consider quadrupling the weighting of Chinese big-caps in its global benchmarks and also proposed adding mid-caps and shares listed on Shenzhen’s start-up board ChiNext.

MSCI’s consultation for a further weight increase of Chinese A-shares came just months after China’s milestone MSCI entry in June, and a day before an index inclusion decision by rival FTSE Russell.

These moves, once implemented, will trigger fresh foreign inflows into China’s $7 trillion stock market.

MSCI, which has included about 230 Chinese big-caps in its flagship indexes with an initial inclusion factor of 5 percent, said in a statement that it has proposed to increase that factor to 20 percent.

The proposed increase will happen in two phases coinciding with MSCI’s index reviews in May and August 2019, it said.

In addition, MSCI also proposed to add ChiNext shares to the list of eligible segments for inclusion starting from the May 2019 Semi-Annual Index Review.

MSCI also considers adding Chinese mid-caps with a 20 percent inclusion factor in one phase as part of the May 2020 Semi-Annual Index Review.

MSCI said it welcomes feedback from the global investment community and will announce its decision by Feb. 28, 2019.

The MSCI China is 'a big deal' symbolically: JP Morgan


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