MSCI cuts dozens of Chinese stocks from its global benchmark indices, raises India’s weightage to record high
- MSCI added five Indian stocks to its Global Standard index with no deletions in its February review; it deleted 66 Chinese stocks and added five new members
- The exclusion of Chinese stocks emerges as China’s weighting in global portfolios slumps amid worries about its struggling property sector
Index provider MSCI is cutting dozens of Chinese companies from its global benchmarks following its February review, after many stocks tumbled as China’s market erased trillions of dollars in value. At the same time, it raised India’s weightage in its Global Standard (Emerging Markets) index to a historic high of 18.2 per cent.
MSCI added five Indian stocks to its Global Standard index with no deletions. In contrast, the index provider deleted 66 Chinese stocks in the highest tally of exclusions in at least two years, while adding five new members.
India’s weightage in the index has nearly doubled since November 2020 and it has the second-highest weightage in the MSCI Global Standard index, after China.
The climb can be attributed to India’s standardised foreign ownership limit in 2020, the sustained rally in domestic equities and relative underperformance of other emerging markets, especially China, Nuvama Alternative & Quantitative Research said in a note.
With consistent flow from domestic institutional investors and steady foreign portfolio investors’ participation, there is potential for India to surpass a 20 per cent weight in the MSCI Global Standard index by early 2024 itself, Nuvama added.
Chinese stocks to be cut include property developers Gemdale and Greentown China, as well as China Southern Airlines and Ping An Healthcare and Technology. All the changes, effective as of the close on February 29, will also apply to the MSCI All Country World Index.
