Domingo, 25 Junio, 2017

Foreign investors bet billions on China blue-chips joining MSCI index

Nikkei nears two-year high as US hi-tech rebound boosts mood US STOCKS-Futures higher as beaten down tech stocks rebound
Malita Javier | 20 Junio, 2017, 11:55

Plans have been shelved three times to include China's A-share index in the EMI, which is compiled by Morgan Stanley Capital International, or MSCI.

On Tuesday, MSCI, the company behind the leading stock market index for emerging markets, will announce whether it will include China A-shares in its index.

Subscribe to Globe Unlimited now! Acceptance of mainland China would mark a major move forward for China's domestic markets and oblige funds all over the world to invest billions in mainland China.

MSCI has rejected A shares repeatedly on concerns over accessibility for worldwide investors, restrictions on repatriation of capital, and licensing restrictions imposed by Chinese authorities for A-share index products in overseas markets. Adding A shares to the index would trigger inflows into China's domestic stock markets due to fund mandates.

La política de EU hacia Cuba recuerda la Guerra Fría: Rusia
El comunicado añadió que los cambios locales que sean necesarios "los seguirá decidiendo de manera soberana el pueblo cubano".

The securities regulator said it would be happy for MSCI index inclusion, but Chinese capital market reform will not be derailed without the inclusion.

As a matter of fact, while the importance of China's economy is common knowledge, what is much less well-known is that the country's equity markets are also among the world's largest.

They expect US$1.6 billion of initial flows into the A-shares market from global passive exchange-traded funds tracking various MSCI indices. There is some controversy around this as not everyone believes in the "Asian Century", but for those who think China will continue to be an increasingly important player, it stands to reason that its financial markets should provide valuable opportunities in the coming years. Similarly, the major index providers should be keen to represent this economic reality through their indices.

Most sectors lost ground, led by the defensive consumer and healthcare stocks.

Bank of England's Carney says now not the time to raise rates
Meanwhile, Chancellor Philip Hammond called for smooth Brexit to avoid a "cliff edge" for businesses as the United Kingdom leaves the European Union.

If MSCI opens the door, such concerns will limit the inclusion of A-shares -- for the time being. And they would probably be included in the EMI next year.

However, we found subtle changes in the market sentiment lately. What is very attractive to investors is the wider selection of stocks with characteristics of technology, high-growth and small-to-medium enterprises, so called "new economy" stocks as opposed to blue-chips listed on the Shanghai stock exchange.

Ulrich stressed that the Chinese government has taken concrete steps to open up its equity markets to overseas investors after rolling out the Shanghai-Hong Kong Stock Connect in 2014 and Shenzhen-Hong Kong Stock Connect in 2016 as well as a bond connect program this year.

Even so, China's A-share index will be small compared to the overall MSCI Emerging Market Index.

Lead surgeon: U.S. congressman Scalise showing improvement after being shot
Doctors immediately performed surgery, but additional operations will be required, the hospital said in the late-night statement. Bailey was spotted Friday in the Capitol, on crutches and out of uniform, accepting congratulations from fellow officers.

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