China Shares Boosted by Index Changes

MSCI and FTSE Russell are increasing the weighting of Chinese stocks in their indices and this will have a big impact on emerging market investing

Jackie Choy, CFA 1 October, 2018 | 10:15AM

Shanghai China

Chinese shares rose last week on news that MSCI and FTSE Russell are planning to increase the weighting of China stocks in their indices in the coming years. These changes are likely to have a significant impact on emerging market investing so investors should understand the makeup of the indices that underpin ETFs and index funds to be better prepared for the changes ahead.

Index providers' definition of "China" is constantly changing. Given the often nuanced differences in index construction as well as the implementation and timing of the inclusions between FTSE Russell and MSCI, the underlying China A-shares constituents and weights could be very different.

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About Author

Jackie Choy, CFA  is an ETF strategist at Morningstar, based in Hong Kong.

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