A-share inclusion tipped to boost long-term stocks

A-sharesThe inclusion of Chinese mainland-listed equities, A-shares, in the MSCI Emerging Markets index ought to benefit investors with exposure to long-term development trends. The prediction, by a fund manager at Fidelity International, assumes the inclusion will increase institutional investor participation in China’s stock market. “With the Chinese A-share market primarily dominated by retail investors currently, market movements tend to be driven by short-term market noise and herding behaviour,” said Raymond Ma. “Institutional investors tend to be more focused on finding long-term winners.” MSCI’s inclusion of A-shares will oblige passive funds that track the index to buy mainland-listed equities. Many active managers are expected to follow suit. The two-step process of adding around 234 A-shares to the MSCI index will take place in June and September. ©2018 funds global asia

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