MSCI will include more than 230 new Chinese stocks in its indices, giving global investors exposure to domestically listed Chinese companies they were restricted from investing in previously.
Index provider MSCI announced in a statement on Tuesday that 234 Chinese stocks would be included on its China Index, Emerging Markets Index and Global Standard Indexes from the 31st of May.
The companies will represent aggregate weights of 1.26 per cent on the MSCI China Index and the MSCI Emerging Markets Index, respectively.
Among the 234 Chinese companies are Air China, China Eastern Airlines, Bank of China, Kweichow Moutai and Tsingtao Brewer.
MSCI had signalled in June last year that it would add selected domestic Chinese shares to its indices.
In a statement, Fidelity International portfolio manager Raymond Ma welcomed the news and said the inclusion of these “A-shares” would likely ramp up the “participation of foreign institutional investors”.
“In the medium to long term, this will help the A-share market to become more sophisticated, improve liquidity and see it increasingly driven by fundamentals rather than short-term market noise,” Mr Ma said.
He added that the Chinese A-share market was “primarily dominated by retail investors currently,” but MSCI’s inclusion looked set to raise the proportion of institutional investors over time.
Mr Ma signalled the sectors of consumer, information technology and industrials, following MSCI’s inclusion of the China stocks, would “outperform in the long term”.
“Institutional investors tend to be more focused on finding long-term winners.
“Thanks to ongoing consumption and industrial upgrading in China, these sectors are likely to deliver sustainable and solid growth in the next three to five years,” he said.
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