MSCI’s major emerging-market stock indices increase weight of China shares to new high
- The change will compel US pension funds, mutual funds and other institutional investors that track the benchmarks to add more shares of Chinese companies
- Move occurs just as a bipartisan group of US lawmakers introduce a bill that would limited investment exposure to China
One of the largest providers of global stock indices has again boosted the weight of Chinese shares in its emerging-market benchmarks despite strong headwinds from US lawmakers who are urging limited investment exposure to China.
MSCI, the New York-based index provider, on Tuesday added 204 China A shares to bring the China country weight to 33.7 per cent, or a third, in the emerging market index, data from JP Morgan shows.
“The benchmark is being skewed with one country weighing an unprecedented one third,” said Steven Schoenfeld, chief investment officer of BlueStar Indexes. “Never before in history was there a single country that counts so high.”
The increase, the third and final planned step-up this year, will compel US pension funds, mutual funds and other institutional investors that track the benchmarks to add billions of dollars more to yuan-denominated shares of Chinese companies.
From the November increase alone, China A shares are expected to see US$7 billion in passive capital inflows, JP Morgan data shows.
