MSCI Boosts China A-Shares - the Morningstar View

This year is shaping up to be a busy one for China A-shares inclusion as MSCI, FTSE Russell, and S&P DJI will all be adding China A-shares to their indices

Jackie Choy, CFA 6 March, 2019 | 10:15AM

MSCI China Table

International investors are increasingly recognising China A-shares as a crucial element within their investment opportunity set. Recall that MSCI first added large-cap China A-shares into its mainline benchmarks starting from May 2018. Since then, different index providers have been busy updating their definitions of what constitutes "China".

On February 28, 2019, MSCI announced it will further increase allocations to large-cap China A-shares in its mainline indices starting from May 2019. The three-step process will increase the inclusion factor from 5% to 20%. It will also include mid-cap China A-shares from November 2019. These changes will result in China A-shares weight in many of MSCI's key benchmarks increasing threefold. Most notably, China A-shares will move from representing less than 1% of the MSCI Emerging Markets Index to 3.3%, on a pro forma basis. 

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About Author

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

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