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CHINA AND A-SHARES

OPPORTUNITIES AND CHALLENGES FOR GLOBAL INVESTORS

MSCI China, which currently includes large and mid-sized Chinese stocks listed outside of mainland China and available to international investors, accounts for nearly 30% by market cap of the MSCI Emerging Markets Index and over 3% of the MSCI ACWI Index as of October 2017.

MSCI recently announced that it will partially include China A Large Cap shares in its flagship equity benchmarks, beginning in June 2018. The addition of China A Large Cap shares will add 0.73% to China’s existing weight of nearly 30% in the MSCI Emerging Markets Index.


MSCI IS COMMITTED TO PROVIDING THE TOOLS AND INSIGHTS INVESTORS NEED TO EVALUATE THE FULL CHINA EQUITY OPPORTUNITY SET

Investigating Chinese equities represents an unprecedented research challenge for emerging market investors, and informed investment decisions require an understanding of China’s share classes, unique market characteristics, major return drivers and Environmental, Social and Governance (ESG) risks. Incorporating China A shares in emerging market and global portfolios is an important challenge to address. Learn how MSCI solutions can help::

The China Corporate Governance Report



China adopted its first corporate governance code in 2001, ahead of many APAC peers, with updates in 2011 and 2016. As China’s market becomes more accessible to global investors, corporate governance practices will likely face increased comparison to global standards.  Our report references MSCI ESG Research’s rich corporate governance data to examine the opportunities and risks to minority shareholders presented by current corporate governance practices among constituents of the MSCI China Index.


BENCHMARKING CHINA’S EQUITY MARKETS

The MSCI China Indexes, part of the Modern Index Strategy, are built using MSCI’s Global Investable Market Index (GIMI) methodology. This is a modern, seamless and global index framework designed to give clients consistency across markets and provide transparent, replicable indexes that may help achieve low turnover.

The flagship MSCI China Index is designed to capture large- and mid-cap segments with H shares, B shares, red chips, P chips and foreign listings (e.g., ADRs) of Chinese stocks. The MSCI China Index represents approximately 85% of China free float-adjusted market capitalization and evolves to reflect the changing equity market. It is the de-facto China benchmark for international investors who use the MSCI ACWI Index or MSCI EM Index as their policy benchmark. Starting in June 2018, China A shares will be partially included in the MSCI China Index. 
 

Note:
- A Shares: China securities incorporated in Mainland China, listed on the Shanghai or Shenzhen Stock Exchange and traded in Renminbi (RMB).
- B Shares: China securities incorporated in China and listed on the Shanghai Stock Exchange (USD) or Shenzhen Stock Exchange (HKD).
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H Shares: China securities incorporated in Mainland China, listed on the Hong Kong Stock Exchange and traded in HK Dollars (HKD).
- Red-Chips: China securities of state-owned companies incorporated outside Mainland China, listed on the Hong Kong Stock Exchange (HKD).
- P-Chips: China securities of non-government owned companies incorporated outside Mainland China, listed on HK Stock Exchange (HKD).
- Overseas-Listed: China securities (including ADRs) listed on foreign exchanges outside of Mainland China and Hong Kong (traded in USD, SGD, KRW etc.)


In addition to the flagship MSCI China Index, MSCI provides a range of other China related Indexes:

MSCI will be launching new MSCI China A Indexes on March 1, 2018 covering China A stocks accessible through Stock Connect, to which we will apply the Global Investable Market Index methodology.

MSCI China All Shares Index includes China A shares not constrained by Connect access*.

MSCI China A International Index is designed to represent the China A shares opportunity for Investors that do not need to access the market via Connect.

MSCI China A Inclusion Index is designed to track the progressive partial inclusion of China A shares in the MSCI Emerging Markets Index over time.

MSCI China A Onshore Index is a standalone index designed to represent the broad China A shares opportunity set for Domestic investors.  This index series is currently called MSCI China A, but will be renamed MSCI China A Onshore on March 1, 2018.

*MSCI has not committed to full inclusion in this or any of its other indexes.

Please find factsheets for more details

Index Licensing

To demonstrate the widespread use and adoption of MSCI indexes, the Exchange Traded Products Based on MSCI Indexes document contains a broad list compiled from public sources of listed funds, derivatives and investment vehicles linked to or licensing MSCI indexes.

The Modern Index Strategy

MSCI indexing offers a modern, seamless and fully integrated approach to measuring the full equity opportunity set, with no gaps or overlaps.

Analytics

MSCI’s Analytics products offer institutional investors an integrated view of risk and return. Our research-enhanced content and tools help institutional investors understand and control for market, credit, liquidity and counterparty risk across all major asset classes, spanning short, medium and long-term time horizons.

ESG Integration

The world is changing. With it, the world of investing is changing. MSCI ESG Research provides in-depth research, ratings and analysis of the environmental, social and governance-related business practices of thousands of companies worldwide.

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