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CTG Duty Free and Chow Tai Fook profit as MSCI index rebalancing coincides with rally fanned by Fed’s rate view

  • China Tourism Group Duty Free, Chow Tai Fook Jewellery and Datang Power are the three biggest additions to the MSCI China All Shares Index
  • MSCI’s semi-annual review took effect after the close of trading on November 30

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A man walks by a bronze sculpture of a bull in the central business district in Beijing, in March 2020. Photo: EPA-EFE
Zhang Shidongin Shanghai

China Tourism Group Duty Free and Chow Tai Fook Jewellery led a rally in Chinese offshore stocks as an MSCI rebalancing exercise coincided with bullish market sentiment to push the duo and 32 other companies on to the investment radar of index-tracking investors.

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The New York-based global index compiler adjusted its MSCI China All Shares Index by adding 34 stocks and removing 39, making China Tourism Group Duty Free and Chow Tai Fook the two biggest winners in the semi-annual index rebalancing exercise.

China Tourism Group Duty Free rose 2.5 per cent to HK$201 while Chow Tai Fook jumped 5.7 per cent to HK$14.44 in Hong Kong on Thursday. Together, their market value surged by US$3.05 billion.

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The index adjustments, first announced on November 10, took effect after the close of trading on November 30. At the same time, MSCI also added 266 stocks to its China All Shares Small Cap Index, and removed 69 stocks from it.

The MSCI China All Shares Index tracked 795 stocks on October 31, according to MSCI database, with a combined market value of US$2.71 trillion. Its biggest constituents were Tencent Holdings, Alibaba Group Holding, Meituan and Kweichow Moutai.
This week’s rebalancing came at a fortunate time for investors, who rode a US$1.7 trillion stock rebound in Hong Kong and mainland exchanges last month in a rally not seen since October 1998. Stock bulls also went on a rampage after Federal Reserve chairman Jerome Powell tempered its policy tightening pace, fanning risk appetite in global markets.

Sentiment on Chinese onshore stocks has been improving following louder calls for Beijing to abandon its zero-Covid policy. Foreign investors bought US$1 billion worth of stocks in the November 25 week, bringing the total in 2022 to US$7 billion, according to data compiled by Goldman Sachs. Mainland funds separately picked up US$47 billion worth of Hong Kong-listed stocks this year.

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