With MSCI quadrupling China A shares’ weighting in its global benchmarks, fund managers expect inflows of US$7 billion
- A shares’ weighting will rise to 12.2 per cent in the MSCI China Index and to 4.1 per cent in the MSCI Emerging Markets Index after the market close today
Fund managers expect fresh inflows of nearly US$7 billion into Chinese equities from global investors after index compiler MSCI lifts the weighting of A shares in its benchmark gauges for the third time this year.
“It is more than just a fresh influx of capital,” said Shen Ye, a Shanghai-based hedge fund manager. “The move by MSCI to continuously raise the weighting of Chinese shares means the stocks here have long-term growth prospects and are worth buying.”
BlackRock, the world’s largest asset manager with US$6.84 trillion in assets under management, predicts that the upcoming adjustment by MSCI will help A shares draw passive fund inflows of US$6.7 billion.
China International Capital Corp, one of the mainland’s leading investment banks, is more upbeat, expecting overall capital inflow of up to US$40 billion from both passive and active funds.
The inclusion factor of mainland listed companies in MSCI’s indices will rise from 15 per cent to 20 per cent after the market close on Tuesday. MSCI has increased the inclusion factor of A shares by 5 percentage points each time in May, August and November, and has quadrupled it since they were added to the benchmarks in June 2018.
