A shares emerge in 2 new indexes
Print Edition
FTSE Russell, one of the world’s largest providers of financial indexes, said yesterday that it will launch two emerging market indexes that include China’s A shares, a prelude for the addition of the world’s best-performing equities to its wildly traded global benchmarks.
The two new Emerging Market China A Inclusion indexes will include the yuan-denominated A shares at an initial weighting of 5 percent, the London-based index provider said in a press release yesterday.
The weighting will be raised to 32 percent when local Chinese shares are fully available to international investors, which will boost the weighting of Chinese stocks, including those listed in overseas markets, to 50 percent of the FTSE Emerging Index, according to the company.
The new inclusion indexes will be merged with the standard FTSE Emerging Markets indexes that are widely tracked by global fund managers when A shares meet FTSE’s criteria, the company said.
Financial indexes are used as benchmarks in allocating portfolios of stocks and other investments.
The FTSE is due to conduct a formal review of whether to add A shares to its global indexes in September.
“The China domestic market is opening up to international investors but it will take several years for all of these investors to gain access to China’s capital markets,” said Mark Makepeace, chief executive of FTSE Russell.
“The transition to include A shares in global portfolios is now beginning and we will support this transition while ensuring that all users of our global benchmarks have sufficient time to manage the change,” Makepeace said.
Similarly, New York-based MSCI Inc, a global indexes provider, will decide on June 9 whether to include A shares. A similar effort failed in June 2014, and the Shanghai Composite Index has surged 140 percent since then.
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