Bonds, Currencies, Emerging Markets, Funds / ETFs, Metals, Stocks

China A-Share Bulls Hold Up: MSCI Says Chinese Regulator Faces “Massive Job” To Join Its EM Index

Yuan China RenminbiAs Chinese stocks enter into a bear market on Monday after being absolutely whipsawed following the news from Greece that sent the nation’s stocks falling over 10 percent then surging back 2 percent (and then back-and-forth), a stark notice has bent sent to bullish investors in China, and it could not have come at a worse time.

On Monday, MSCI said that China’s securities regulator faces a “massive job to coordinate the changes needed for domestic shares in Shanghai and Shenzhen markets, known as A-shares, to be listed in its key emerging markets index, Reuters reports.

MSCI’s global emerging markets index, is a big deal, as most investors already know, as it is tracked by $1.7 trillion of funds.

“It’s not a simple issue – they have to coordinate nine ministries…so don’t underestimate how difficult this task is,” Chris Ryan, head of Asia Pacific at MSCI, told an investor conference in Hong Kong.

On June 10, MSCI told China that it needs to further liberalise its capital markets before its share will be able to be included into its Emerging Markets Index, tracked by $1.7 trillion of funds.

Prior to the MSCI decision, Vanguard Group — the largest U.S. mutual fund firm — decided that it would add mainland Chinese shares to its $69 billion emerging-market fund.

A week prior to MSCI’s announcement, index provider FTSE announced that it was including China’s A shares in two new transitional emerging market indexes called the FTSE Emerging Markets China A Inclusion Indexes, with one Index that will track all-cap stocks and the other index to track large and mid-cap stocks.

MSCI previously estimated that such a move could  bring $400 billion to China stocks over time.

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