What next after China’s MSCI inclusion?
By , 22 Jun 17
Wealth and asset managers give their views on the implications of the MSCI inclusion of A-shares and where they find investment opportunities onshore.
Mike Shiao, Asia ex-Japan CIO at Invesco, said the 222 A-shares to be added to the MSCI EM index offer a better representation of China’s real economy.
There are 2,899 listed companies on the Shanghai and Shenzhen bourse with a total market capitalisation of $7.4trn, versus 1,096 Chinese stocks listed offshore totalling $3.9trn (95 of them are dual-listed), he noted.
“The inclusion will bring the weights for industrials, healthcare, consumer staples, materials, IT and telecommunications as well as energy closer to their respective GDP representation.
“At the same time, A-shares also contain many unique companies that are not abundant in the offshore space such as household furnishings, chemicals, renewable power producers, biotechnology and pharmaceutical companies,” he said.
Although a full inclusion might take years, the firm estimated that ultimately the MSCI EM index will have a 12.8% weighting of China A-shares and a 37.2% for overall China.