MSCI seeks feedback on potential China stocks inclusion

(Adds details)

NEW YORK/HONG KONG, March 23 (Reuters) - Global index

provider MSCI Inc is seeking feedback from market

participants on whether to add Chinese shares to a widely

tracked index, a move which could trigger billions of dollars in

capital inflows into mainland stocks and ease pressure on its

yuan currency.

MSCI did not add Chinese shares to its Emerging Markets

Index, for a third year running in 2016, citing concerns over

share suspension rules and monthly limits on repatriating


The emerging index is tracked by $1.6 trillion in global


In a 15-slide presentation posted on its website, MSCI

highlighted the concerns raised last year, the steps China has

taken to address those questions and key discussion points posed

to investors.

China has removed quota limits on its landmark stock connect

programs between Hong Kong, Shenzhen and Shanghai, and reduced

the number of shares which are suspended to levels seen before a

market crash in mid-2015.

Hong Kong and China shares pulled off lows on expectations

that the new proposals, which would include large-cap stocks but

exclude dual-listed shares among others, would be more

acceptable to global investors.

If the proposed new rules are applied, the number of Chinese

stocks that would have to be included would drop dramatically by

two-thirds to 169 stocks leading to a sharp drop in market

turnover, a crucial source of costs for passive funds.

MSCI will also take a decision on whether to reclassify the

Argentina index as an emerging markets index. The country has

been classified as a frontier market since 2009.

(Reporting by Dion Rabouin in NEW YORK and Saikat Chatterjee in

HONG KONG; Editing by Kim Coghill)