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Hong Kong stock exchange chief sees China MSCI inclusion as inevitable
[HONG KONG] Hong Kong's stock exchange chief Charles Li said it is inevitable that Chinese 'A' shares will be included in a benchmark emerging markets index, a day after inclusion was put on hold for at least another year.
US index provider MSCI Inc said on Wednesday that China must further liberalise its capital markets before it will include Chinese domestic shares in its Emerging Markets Index , tracked by US$1.7 trillion of funds.
"The question now is no longer whether MSCI will include 'A'shares...but how fast?," Hong Kong Exchanges and Clearing Ltd chief executive Li told a forum on Thursday.
If MSCI does include mainland Chinese shares, it will also have to decide what initial weighting to give the 'A' shares in the index, with 5 per cent the likely starting point.
Both MSCI and Chinese state media spun Wednesday's decision as a speed bump on the way to inevitable inclusion, though some people say the agendas of Chinese bureaucrats and foreign institutional investors are much further apart than they seem.
Mr Li said the imminent launch of a trading link with Shenzhen, mirroring the Shanghai-Hong Kong stock connect program launched last November, would accelerate the inclusion of 'A' shares in the MSCI index.
Mr Li said that trading quotas that cap investment into mainland Chinese shares, another barrier to inclusion, could be lifted by regulators or eased by a workaround. "These barriers are not material ones and can be solved in the near future," Mr Li said.