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July 11, 2017

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Bourses going more global

CHINA’S stock markets will be more connected to the international market with MSCI’s incorporation of China’s A share and the launch of the Bond Connect between the mainland and Hong Kong.

The proportion of China’s A-share in Morgan Stanley Capital International Emerging Market Index is expected to rise from 0.73 percent in August, 2018 to 20 percent in 2030, Citibank said yesterday.

The US dollar will get weaker and capital will be skewed toward emerging markets and Asian markets (except Japan), which can help improve emerging markets and Asian markets, said Catherine Cheung, head of the portfolio advisory at Citibank.

Among these markets with great potential, China will be more connected to the international market, owing to the launch of the Bond Connect and A-share’s getting more weighting in the MSCI.

MSCI announced that the incorporation of China’s A shares will be carried out in several phases. Five percent of 222 stocks will be brought into the index in August, 2018 as the first step. By 2025, it will include all of the 222 stocks and by 2030, 500 A-shares will be incorporated.

Bond Connect is a program operating alongside the existing Stock Connect system. This aims to strengthen the connection between China’s mainland and Hong Kong, injecting new energy into the development of Hong Kong. It allows international and China’s mainland investors to directly access to each other’s markets.


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