Photo/Shetuwang

Feb. 13 (NBD) – MSCI Inc, a global leading provider of research-based indexes and analytics, announced Tuesday that 17 securities will be added to and one security will be deleted from the MSCI ACWI Index.

Among the 17 newly-included companies, 12 are based in China including Foxconn Industrial Internet, Meituan Dianping, and Xiaomi, which are the three largest additions to the MSCI Emerging Markets Index measured by full company market capitalization.

The high proportion of China-based companies implied MSCI's intense attention to Chinese companies and market.

With regard to whether to lift the weight of A shares in its indexes, a matter that the market is mostly concerned about, the index complier stated the final decision will be released before March 1.

It is noted that A shares will also be included into the FTSE 100 Index and Russell Indexes this year. The addition of A shares to different indexes is aimed at paving way for foreign investments into the A share market.

Cao Gang, investment director at an investment company in Hangzhou, said to news outlet the 21st Century Business Herald last December that as foreign capitals constantly flow to mainland China through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, foreign investments will be a force to be reckoned with, playing a leading role in the market this year.

Zhang Yu Long, an analyst with China Securities, predicted that if MSCI increases the proportion of A shares from 5 percent to 20 percent, the capitals brought by the addition will reach about 67.86 billion U.S. dollars.

MSCI's chairman and CEO Henry Fernandez once noted in an interview with the 21st Century Business Herald last year that whether to lift the weight of A shares will be partly determined by overseas investors' experience of investing in A shares. It is noticed that the result will be also influenced by the openness of Chinese market.

A QDII fund manager of a public offering of fund in Beijing commented it's highly likely that the proportion of A shares will be finally increased since more and more foreign organizations are pursuing a slice of the Chinese market.

Statistics from a team with China Merchants Securities showed as of the end of 2018, the yuan-denominated assets held by overseas organization totaled 4.85 trillion yuan (716.7 billion U.S. dollars). The addition of A shares to different indexes this year will further bring about 68 billion U.S. dollars, according to the team.

Wind data indicated as of January 30, northbound inflows of foreign capital into the A share market via China's stock connect initiatives reached 52.024 billion yuan (7.7 billion U.S. dollars), nearly three times as 16.143 billion yuan (2.4 billion U.S. dollars) for last December.

Email: wenqiao@nbd.com.cn