Be Wary of the MSCI China Inclusion Hype (WSJ)
MSCI, one of the biggest index compilers, is expected to make a decision later this month on whether to include shares listed on China’s domestic exchanges (known as A shares); but the Wall Street Journal’s Heard on the Street blog recently had a post saying investors should be wary of the hype because:
The initial impact would be very small even if MSCI decided to pull the trigger. Inclusion would still be a year away and even then, initially the weighting would only be 5% of a full inclusion. Estimated inflow linked to the initial inclusion will be less than one day of average turnover.
And then there’s the issue of what investors would be getting themselves into. China’s A shares trade at a 35% premium to their Hong Kong-listed shares for dual-listed companies. China’s biggest oil firm, PetroChina, for example, is 63% more expensive in Shanghai than in Hong Kong. Hong Kong and U.S.-listed Chinese stocks are already included in MSCI indexes.
Heard on the Street went on to mention China’s “checkered regulatory record, highlighted last summer by a bumbling market intervention.”
To read the whole post, China and MSCI: Index Inclusion Creates Illusion of Grandeur, go to the Heard on the Street blog on the website of the Wall Street Journal. In addition, check out our China closed-end fund list and China ETF list pages.
- Results of MSCI 2017 Market Classification Review (MSCI)
- Lessons From a Decade of Chinese Stock Trading (WSJ)
- Hong Kong Stocks Roar Into 2021 on Surge of Investment From China (Nikkei Asia)
- Saudi Arabia Inclusion and Emerging Markets (MSCI)
- Private Equity Firms in Southeast Asia Are Cashing Out Faster (WSJ)
- Naspers’ Tencent Stake Drives the MSCI South Africa Index’s Returns (KraneShares)
- Investors Could Short Hong Kong to Hedge Long Shanghai Positions (BOCOM International)
- Didi Ekes Out 1% Gain After New York IPO Pop Fizzles (Nikkei Asia)
- Investing in Hong Kong ETFs / Hong Kong ETF List
- Fund Manager Consensus: Hong Kong Needs China More Than Vice Versa (AsianInvestor)
- How Huawei Grew and Its Prospects in the US (WSJ)
- What Hong Kong Dollar Bond Exposure Means to Investors (The Asset)
- MSCI’s Decision on China’s Onshore Stock Market
- The 40 Biggest Chinese Stocks Being Added to the MSCI Index (Fortune)
- Changes to the Emerging Markets Club: China (A Shares), Argentina and Saudi Arabia (Franklin Templeton)
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