China blue-chips hit 18-mth high on MSCI inclusion hopes

[SHANGHAI] China stocks rose on Monday morning, led by the blue-chip index advancing to a record high since 2016, after the MSCI chief said the index provider could raise its weighting of China A-shares.

The Shanghai SE 50 Index, an index tracking the 50 most representative blue-chips in the Shanghai Stock Exchange, moved up 0.5 per cent to an 18-month high. The index has gained 11.2 per cent in 2017, versus a gain of 2.4 per cent in the benchmark SSEC.

The CSI300 index rose one per cent, to 3,658.73 points at the end of the morning session, while the Shanghai Composite Index gained 0.6 per cent, to 3,178.15 points.

US index provider MSCI Inc Chief Executive Henry Fernandez said that in the future the MSCI Emerging Markets Index could raise its weighting of China A-shares, potentially adding 195 mid-sized stocks, Shanghai Securities news reported.

MSCI's decision to add 222 China-listed large-cap stocks to its Emerging Markets Index (EMI), tracked by around US$1.6 trillion, has already fuelled a buying spree for blue-chips on the mainland.

The decision is widely expected to bode well for the long-term development of A-share market.

"For now we are optimistic about the (A-share) market, which has been picking up recently, aided by better policy and liquidity conditions," Haitong Securities wrote in a report.

Listed companies in the A-share market are also expected to record rapid profit growth in the second quarter and for the full year, the brokerage added.

Sectors rallied across the board in the morning. the top performing real estate sector jumped 3.1 per cent to a six-month high, led by bellwether China Vanke which surged 6.4 per cent after a 10 per cent gain the previous session.

The CSI300 bank index gained 0.6 per cent, after the nation's top banking regulator told banks to push forward with reform.

The market showed scant reaction to news that China meted out a nearly 700 million yuan (S$141.94 million) punishment to a Russian-controlled high-frequency trading firm for futures market manipulation on Friday.

Hong Kong stocks followed other Asian markets higher on optimism about global growth.

The Hang Seng index added 0.4 per cent, to 25,768.13 points.

The Hong Kong China Enterprises Index gained 0.5 per cent, to 10,485.29.

REUTERS