Access to Chinese equity and capital markets is widening.

MSCI, which provides market indices of equities and other major markets, has launched 12 indices that it says tap global investor demand for holding mainland China stocks.

The move comes after the organisation said last June it will partially include the large-cap China A-shares in the MSCI Emerging Markets Index and the MSCI ACWI Index. The MSCI China Indexes will cover all share types of Chinese companies listed globally, it said.
 
“With the increased liberalization and internationalization of the China market, investors have expressed a clear need for more insight and tools to make better informed investment decisions. MSCI is committed to providing a full suite of innovative products, including Indexes, Risk Models and ESG ratings to assist in this area,” Theodore Niggli, head of APAC index products, MSCI, said.

Access to Chinese equity and capital markets is widening. Hong Kong Exchanges and Clearing Limited (HKEX) have approved Realtime Delivery versus Payment, or Real-time DVP, money settlement in Renminbi, Hong Kong dollars and US dollars for Stock Connect and its mutual market access programmes with the Shanghai and Shenzhen stock exchanges. This development should limit settlement risk and make it easier to trade A-shares, industry figures say.

From June 2018 the MSCI emerging markets index is to include 222 large A-shares. These will comprise just under 1 per cent of the index to start with, but the proportion is expected to grow, as it did in the China H-shares market.

The indices reflect the China A shares opportunity set, and follow the MSCI Global Investable Markets Indexes Methodology and the Stock Connect eligibility constraints for large cap and mid cap companies.