Citi China Securities Services said in a report that the MSCI inclusion of A-share stocks had long-term significance. We view this as expected and in some ways, long overdue. Germany's DAX dropped 0.6 percent to 12,736.73.
MSCI has been in discussions with Chinese regulators and global investors for four years over whether to add yuan-denominated shares to the Emerging Markets Index - tracked by around $1.6 trillion in assets - but excluded them because of restricted access to China's equity markets.
220 stocks will be included in this phase, with a total market capitalisation of $700 billion.
According to the review, a two-step inclusion process will be used to account for the existing daily trading limits on Stock Connect. Presently, the stock has a 14-day RSI of 52.46, the 7-day is sitting at 47.87, and the 3-day is resting at 37.96.
However, there are some analysts who still think the move won't impact India much.
Stocks benchmark provider MSCI Inc. said Wednesday it will add mainland Chinese shares on its emerging markets index - after three previous rejections - a big step toward validating China's efforts to gain credibility with global investors and open its capital markets overseas.
However, while they're likely to be the losers in Tevfik and Liu's opinion, that suggests Australian-listed global financial firms - such as Macquarie Bank and Computershare - will benefit from continued capital market reforms in China. Its stock rose $9.04, or 10 percent, to $99.00.
The resilience of Stock Connect programs. There is also potential for a more significant opening up of its onshore bond market.
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These markets include: Dallas-Fort Worth, Washington DC, Houston, Atlanta, Phoenix, Detroit, Minneapolis-St. Paul, Miami-Fort Lauderdale, Orlando-Daytona Beach-Melbourne and Charlotte within the next couple of weeks.
New York-based MSCI said it will add 222 China A-share stocks to its developing-nation measure starting in May 2018.
"At $US34 billion the A-shares inclusion will initially not be a big deal for investors in Australia or elsewhere for that matter", the pair wrote in a note released on Thursday. Therefore, the fund house regional portfolio holdings are more than 30 percent exposed to China via H-shares and American Depository Receipts (ADRs). The sectors would represent the biggest weightings of China stocks in the MSCI EMI.
The historical precedence for full inclusion is approximately ten years.
"In our experience, many Chinese A-share managements have yet to fully grasp the duties imposed by a listing, not to mention inclusion in a global index".
iShares MSCI Taiwan Index (NYSEARCA:EWT) was the target of unusually large options trading activity on Friday.
From today, China's domestic companies are going to be more relevant for IFAs and their clients. However, with the rapid advancement in technology and information flow, and with political will, we believe China is likely to reach full inclusion in global indices.
Chinese stocks were, however, little moved by their addition to MSCI's benchmark indexes, as investors weighed the symbolic importance of inclusion against the limited impact on short-term inflows.