June 22, 2016

John Sin: China’s A-shares, another step closer to MSCI inclusion

John Sin

John Sin


Every June, market participants turn their attention to MSCI’s annual Market Classification Review, particularly the potential inclusion of China A-shares in its Emerging Markets Index. On June 14, 2016, MSCI announced they would delay including China A-shares in the MSCI Emerging Markets Index.

According to John Sin, Head of Asset Servicing, Greater China, BNY Mellon, the inclusion of China in MSCI index will eventually happen given the significance of the market.

“Although this delay may be unsurprising to many, an initial inclusion weighting of 5%, would have been unlikely to send shockwaves through the international investment community,” commented John. “Be it through the various Stock Connect routes, RQFII initiatives (the latest of which is the U.S. allocation) or the indices, global investors are still closely following every progressive move with the intention of stepping up investments into China.”

John added, “MSCI noted the significant improvements in the accessibility of the China A-shares market for global investors. The day when we see China being included is not that far off and investors are preparing for it.”

In early June, China announced it will grant a 250 billion yuan ($38 billion) investment quota to the U.S. under the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme. This is the first time China has granted the quota to the U.S. – the largest RQFII quota after Hong Kong. The quota will allow U.S. companies to use offshore yuan to invest in China’s capital markets.