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China stocks enter MSCI as US$6.9 trillion market goes global

Bloomberg Published on Wed, Jun 21, 2017 / 7:43 AM GMT+8

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(June 21): China’s domestic equities will join MSCI Inc.’s benchmark indexes after three failed attempts, a landmark step in the nation’s integration with the global financial system.

The decision, announced by the New York-based index compiler on Tuesday, will give China’s US$6.9 trillion ($9.55 trillion) stock market a bigger role in everything from exchange-traded funds to 401(k) retirement plans. It also advances President Xi Jinping’s ambitions to make the yuan a global currency.

While locally-traded Chinese shares will initially comprise just 0.7% of MSCI’s global emerging-markets gauge, the weighting could increase over time if the country enacts further reforms. The inclusion will be done in two steps: the first in May 2018 and the second in August of next year. Also Tuesday, MSCI put off decisions on whether to reclassify Argentina as an emerging market and to demote Nigeria to standalone status. It listed Saudi Arabia on its watch list for potential classification as an emerging market.