While nowhere near comparable to the euphoria from last year, when hopes that China would be included in the MSCI emerging market index led to a tremendous rally in Chinese stocks on expectations of substantial inflows once asset managers had to allocate funds to China…
… today’s silver lining for the US bulls, and certainly China mainland investors, was the expectation that after having snubbed China last year, MSCI would at least include it today.
Alas no such luck, because moments ago Bloomberg reports that…
- MSCI TO DELAY CHINA A-SHARES IN EMERGING MARKETS INDEX
As Bloomberg reporrts,
China’s domestic equities were denied entry into MSCI Inc.’s benchmark indexes, a setback for President Xi Jinping’s efforts to raise the profile of mainland markets and turn the yuan into an international currency.
The index compiler cited the need for additional improvements in the accessibility of the A-share market for the decision, it said in a statement on Tuesday.
China was rejected despite a flurry of measures this year to address MSCI’s concerns, including curbs on arbitrary trading halts and looser restrictions on cross-border capital flows. The decision suggests international investors are still uncomfortable putting their money in the $6 trillion market after a botched government campaign to prop up share prices roiled global equities last year.
As MSCI notes there are “significant improvements” in accessibility of the China A shares market for global investors and MSCI will retain China A shares inclusion proposal as part of 2017 market classification review, however not yet. MSCI also doesn’t rule out potential off-cycle announcement should added significant positive developments occur before June 2017.
They won’t.
Sorry China, and better luck in 2017. Meanwhile, the China CSI-300 ETF tracker is tumbling as all those who had frontrun an event which Goldman said had a 74% probability of happening, unwind their positions.
And the offshore Yuan is extending its losses…
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