Name: SCMP
Telephone: +852-2680-8888

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

knowledgeQuestion

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

Peggy Sito

Global investors are gearing up to invest in China’s stock markets as their confidence grows following the accelerated deregulation of the country’s financial sector and inclusion of A shares in the MSCI’s emerging markets benchmark next month, according to investment bank JPMorgan.
Filippo Gori, head of sales and marketing for markets and investors services for Asia-Pacific at JPMorgan, said global investors’ understanding of China has deepened after one of China’s top economic advisers Liu He’s visit to the US in March.
“Investors are impressed by how knowledgeable he is and by his understanding of what foreign investors are looking for,” he said.
What is the MSCI index, and why does it matter so much to China?
“All the policies the [Chinese] government recently announced have improved foreign investors’ perception of China despite concerns over the escalating US-China trade conflicts,” said Gori. “They think China is moving in the right direction by opening up the market.”
China is in the process of opening up its securities sector to foreign players and will allow them to own a maximum 51 per cent stake in securities joint ventures.

From May 1, China quadrupled the daily quotas of the stock connect schemes linking mainland and Hong Kong markets, in a move seen easing the inclusion of A shares in the MSCI index.
“We expect an increase in stock transaction volumes in the short-term as a result of the expansion of the quotas,” said Gori.
Under the phased inclusion plan, MSCI, the global equity indices compiler, will include 222 mainland listed firms in its widely tracked Emerging Markets Index from June 1.
MSCI’s A-share nod brings Chinese stocks into the global mainstream
 JPMorgan research estimates the inclusion would draw around US$6.6 billion of passive inflows into Chinese stocks.
“We estimate the active flows can be several times larger than the passive flows,” said Gori.
Foreign investors have been piling into A-share stocks, with money buying from Hong Kong into Shanghai and Shenzhen stocks via the cross-border connect scheme totalling 187.04 billion yuan (US$29.5 billion) in April, up six per cent from March.

“MSCI inclusion is a major catalyst for meaningful foreign inflows into the A-share market,” said Gori. “In the long-term, volumes will inevitably increase as the development and scale of China’s capital markets accelerate, and as the importance and size of China’s economy grows.”
Gori said the deregulation and the MSCI’s A shares inclusion would underpin the growth of foreign institutions’ participation in China, helping the Chinese market to move from being retail driven to institutional driven.
China’s A-shares inclusion to MSCI global equity index looks almost certain
China’s stock market is currently dominated by retail investors in terms of turnover. About 85 per cent of the turnover comes from retail investors, against Hong Kong’s 30 per cent, 20-30 per cent in the US and 10 per cent in UK.
In preparation for greater foreign flows into China, Gori said the bank has increased its Greater China equity research headcount by 20 per cent.
“We do have a fairly aggressive investment plan in place for 2018 and 2019.”
The US bank has added four new analysts to its team in an anticipation that technology, media telecoms and health care sectors will be the most sought after by global investors.


Hong Kong stocks post biggest weekly gain in nearly 5 months

Hang Seng Index closes above 18,000 for first time in 2 months after Fed rate cut

Absent stimulus, pain for China stocks will continue, Cambridge Associates says

Bridgewater’s Ray Dalio, Singapore’s GIC chief firm on China despite global growth worries

China stock market

Global investors take their positions ahead of China’s inclusion in MSCI index

About 85 per cent of China’s stock market turnover is accounted for by retail investors. Photo: Imaginechina

Exterior view of the Shenzhen Stock Exchange building in the Futian District, Shenzhen. 02APR18 SCMP / Roy Issa

Vice chairman Filippo Gori, head of sales and marketing for Markets & Investor Services Asia Pacific, J.P. Morgan, poses for a picture in Central. 27APR18 SCMP / David Wong

A smart move by MSCI to spur greater reform in Chinese markets

After three previous rebuffs by the world’s most influential indexer of emerging market stocks, China’s domestic A-shares will be included in the MSCI benchmark, starting in 12 months. Photo: AP

China regulator says A shares inclusion by MSCI ‘can’t wait too long’

The MSCI is due to announce its decision on the inclusion of A shares into its global benchmarks on June 14. Photo: Reuters

China’s A-shares inclusion to MSCI global equity index looks almost certain

The MSCI looks likely to admit China’s domestic shares into its global equity indexes during it annual review on June 20

Inclusion into the MSCI Emerging Market Index should attract around US$8 billion worth of funds to China’s A-shares markets, assuming an initial 0.5 per cent weighting. Photo: Felix Wong

Chinese shares in MSCI: What’s the big deal?

An investor walks past a screen showing stock market movements in Hangzhou in eastern China’s Zhejiang province. Photo: AFP

A man at a brokerage house in Shanghai. Photo: Reuters

FILE PHOTO: A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, China April 3, 2014. REUTERS/Petar Kujundzic/File Photo

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai on March 16, 2017. / AFP PHOTO / Johannes EISELE

(FILES) This file photo illustration taken on August 9, 2016 shows Chinese 100 yuan notes in Beijing. China's foreign exchange reserves plunged by $69 billion in November to a five-year low, according to central bank data released on December 7, 2016 as policy-makers battled to support the yuan currency against a resurgent dollar. / AFP PHOTO / Fred DUFOUR

epa05767934 Chinese investors take a nap beside a large screen showing share prices at a securities brokerage house during the first trading day of the Chinese stock market after Chinese Spring Festival holidays, in Beijing, China, 03 February 2017. The benchmark Shanghai Composite Index fell 0.6 percent at 3140.17 points and the Shenzhen index fell 0.47 percent at 10,004.8 points. EPA/WU HONG

Chinese stocks climb after being given the nod to join MSCI’s global benchmark indexes

MSCI, the New York-based index compiler, has said it will include 222 big-capitalisation Chinese stocks into its MSCI Emerging Markets Index and MSCI ACWI Index starting June next year. Photo: Reuters

FILE PHOTO: An investor holds onto prayer beads as he watches a board showing stock prices at a brokerage office in Beijing, China, July 6, 2015. REUTERS/Kim Kyung-Hoon/File Photo

Business

Money

Markets & Investing

Banking & Finance

Investor Relations

Wealth

Markets

Money News

The phased addition of A shares in MSCI’s Emerging Markets Index will prove to be a major catalyst for foreign inflows into China’s stock markets, says top JPMorgan banker
