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
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. https://www.msci.com/index-consultations
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)