A-share inclusion to spur China's development

Shenzhen stock marketThe addition of about 230 mainland-listed China A-shares to the MSCI Emerging Markets index will accelerate the internationalisation of China's capital markets. The managing director of China Post Global, who made the claim, also described China as “a long-term megatrend”. “The MSCI inclusion is a further concrete step in the ongoing opening of the Chinese stock market and reflects the strong demand from international investors as well as the greatly-improved access,” said Danny Dolan. MSCI will add the shares to the index in June and September. Passive funds that track the index will be obliged to take holdings in the included shares. Active fund managers that use the index as a benchmark may choose to do the same. “It is worth noting that volatility and leverage are still a concern for many international investors,” added Dolan. “We believe a selective approach such as smart beta can mitigate both concerns considerably.” ©2018 funds global asia

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