China’s attempt to woo foreign investors has been given a boost following an agreement from the world’s largest stock index provider to list the country’s shares.
C hina’s attempt to woo foreign investors has been given a boost following an agreement from the world’s largest stock index provider to list the country’s shares.
Index giant MSCI will next year add the shares of 222 Chinese companies to its emerging markets benchmark for the first time ever, having rejected bids to include Chinese mainland shares three times before.
The move will usher more investment towards China, with BlackRock’s Asia Pacific chairman Ryan Stork saying the firm’s clients will benefit from the decision to “bring Chinese equities into mainstream investment”.
MSCI’s decision means that some tracker funds will begin to include Chinese shares, with an initial flow of some $1.8bn (£1.4bn) expected from passive funds.
The investment community has been waiting on this decision for years, with most fund managers avoiding the Shanghai bourse due to restrictions on dealing, foreign ownership and the opaque structure of many listed businesses, meaning that a huge chunk of the world’s capital has not been invested in China.
Jason Sung, partner at law firm Herbert Smith Freehill, said the decision signalled “further international recognition” for the fifth largest market in the world, now seen to have addressed the worries that have been flagged in the last three years.
