Beijing Wants Greater Clout for Chinese A-shares on MSCI Indices


The securities regulator says that it hopes to increase the inclusion factor of renminbi-denominated Chinese A shares on MSCI indices as soon as possible.

At the 10th Lujiazui Forum in Shanghai on 14 June Fang Xinghai (方星海), vice-chair of the China Securities Regulatory Commission (CSRC),  said that the authority would “research relevant new systems and tool arrangements, in order to facilitate an increase in the inclusion rate of A-shares in MSCI indices to around 15% as soon possible.”

Index compiler MSCI included 226 large-cap Chinese A shares in its Emerging Market Index on May 31, conferring them with a partial inclusion factor of 2.5% and an aggregate weight of 0.4%.

In September MSCI will lift the inclusion factor and weighting of these A-shares to 5% and 0.79% respectively.

The CSRC vice-chair said that the authority would also expand the vigour of capital market opening, continually improve the regulatory system for stock connect initiatives between Hong Kong and Shanghai and Shenzhen, as well as further facilitate the use of qualified foreign institution investors (QFII) and renminbi QFII’s (RQFII) by foreign investors to engage in cross-border investment.

“[We] must reform capital market systems in accordance with the high standards demanded of qualified investors and mature markets…in order to be able to raise the quality and international competitiveness of China’s capital markets.”

Fang noted that the Shanghai-London Stock Connect scheme was already in the works, while CSRC would also push for the participation of more overseas traders in China’s commodities futures and financial futures markets, and actively drive the “expansion abroad” of exchanges and securities futures entities.

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