以下为此文英文原文：MSCI reweighting reflects China’s integration with global markets
By James Kynge,Emma Dunkley in Hong Kong
The world’s leading equity index provider, MSCI, took its biggest step yet to integrate China’s domestic stock markets with international capital on Friday in a move that could see an estimated $125bn flowing into Chinese equities this year.
MSCI announced it would quadruple China’s weighting in its flagship emerging markets index, an influential benchmark tracked by $1.9tn of funds, to 3.3 per cent by November this year from 0.71 per cent.
Funds that benchmark their performance against the index are obliged to buy the underlying stocks, triggering inflows to China.
The move underscores how China’s government — which aggressively pushed for the increased weighting — has opened its capital markets in spite of growing political and trade tension with the US. Xi Jinping, the Chinese leader, will meet Donald Trump, the US president, in April in an attempt to resolve the current trade war.
“At the end of the day, [MSCI A-share inclusion] is driven by the [Chinese] authorities,” said Remy Briand, chairman of the MSCI index policy committee. “They have been very active.”
Chinese stocks listed offshore in Hong Kong and the US already feature broadly in the MSCI Emerging Markets Index with a 31 per cent weighting. The importance of MSCI’s latest decision is that it creates a stronger link between the domestic Chinese stock market — the second largest in the world — and international capital.
By November this year, the total weighting in the MSCI index for offshore and domestic Chinese stocks will be about 34.3 per cent — by far the largest country weight.
Expectations for the MSCI decision has already driven huge inflows, helping propel the CSI 300 — China’s benchmark equity index — to a 22 per cent increase this year. This surge reversed a slump in the final quarter of last year.
“Foreign funds buying has resuscitated the fortunes of the A-share markets,” said John Lin, portfolio manager at AllianceBernstein, an asset management company.
An MSCI executive said that about $80bn in offshore money is expected to flow into A-shares this year as a result of the increased China weighting in the MSCI index.
This corresponds with a forecast made by Fang Xinghai, deputy head of the China Securities Regulatory Commission, that inflows of foreign capital into the stock market would total about Rmb600bn ($89bn) this year. This was double the net inflow of Rmb300bn last year, he said.
However, analysts said that up to $125bn of offshore money could flow into domestic Chinese stocks because of the reweighting.
François Perrin of East Capital in Hong Kong said he expects the inflows to continue in the first half of this year. “The pace of inflows has accelerated significantly to reach US$20bn year-to-date and we expect the momentum to continue [in the first half of this year],” he said.
The MSCI decision will mean the inclusion of more Chinese A-shares in the MSCI EM index, so that by November a total of 253 Chinese large-capitalisation stocks and 168 mid-capitalisation stocks will feature. Among these will be 27 stocks from ChiNext, the Chinese equivalent of the US’s Nasdaq market.
“The largest ChiNext names will join the index and offer an opportunity to get exposure to the most dynamic and innovative side of the Chinese economy,” said Mr Perrin.
Nevertheless, the addition of so many Chinese stocks that are often troubled by poor governance and insufficient transparency could prove a headache to some international investors.
“Active managers have a difficult job to do. They have to analyse a much large universe of stocks,” Mr Briand said. “But if you do your homework you can add value,” he added.
MSCI is ultimately aiming for “full inclusion” of A-shares into the MSCI EM index, Mr Briand said, at which point the total weight of offshore and domestic stocks in the index may reach around 40 per cent.
But the speed towards this goal will depend on the willingness of Chinese authorities to reform. For one thing, MSCI would like to see the settlement period for stocks lengthened to “T+2”, or two days after a transaction is agreed, up from the present same day or the following day. In addition, MSCI would like to see a broader use of equities futures contracts, allowing offshore funds to hedge their risks in the market.
The increased weighting for domestic Chinese stocks in the index is set to happen in three steps in May, August and November this year, MSCI said. This timetable represented an acceleration of proposals made during consultations with clients over the past few months, MSCI executives said.
“The timing of the whole review process by MSCI and the pending announcement is ahead of our initial expectation,” said William Yuen, investment director at Invesco. “There is a fair probability that we can see full inclusion within five to 10 years, as China continues to adopt [a] more free-market mechanism and approach.”
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发表于 2019-3-1 16:59
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