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MSCI

New-economy sectors pull higher after MSCI list revealed

Index compiler releases final list of 234 Chinese large caps that will be added to its benchmark Emerging Markets Index, starting next month

PUBLISHED : Tuesday, 15 May, 2018, 9:23am
UPDATED : Tuesday, 15 May, 2018, 5:01pm

MSCI’s final roll call of Chinese stocks to be added to its key equity indices made their debut appearances on Tuesday, as 11 new comers to the list collectively pulled higher, most of which belong to the so-called new-economy sectors such as health care, entertainment, and information technology.

The global index provider announced earlier in the day it will add 234 large-cap A shares, which are denominated in yuan and traded on either Shanghai or Shenzhen stock exchanges, to its relevant global and regional equity indices, starting from June 1.

These indices include the widely-tracked benchmark MSCI Emerging Markets Index, the MSCI All Country World Index, and the MSCI China Index.

“The inclusion has a bigger psychological impact on the overall market than real impact, as the initial weighting is too small,” said Qiu Zhicheng, an equity analyst for ICBC International. “But investors will probably pursue relevant stocks in the first stage, especially those sectors that haven’t attracted much fund inflows previously.”

Compared with a previous provisional list announced in March, MSCI added 11 newcomers in the final list, which include four Chinese pharmaceutical companies.

The full list is: Shandong Buchang Pharma, Sichuan Kelun Pharmaceutical, Tonghua Dongbao Pharmaceutical, and Zhangzhou Pientzehuang Pharmaceutical, entertainment firm Perfect World Pictures, menswear retailer Heilan Home, feedstuff producer Tongwei, electrical equipment maker Shanghai Electric, auto parts manufacturer Zhejiang Century Huatong Group, LCD supplier Tianma Microelectronics, and integrated circuit chip maker Ninestar.

Ten of the 11 stocks had risen by Tuesday’s market close, with Ninestar soaring the most, up 7.6 per cent to 31.55 yuan (US$4.96) on the Shenzhen Stock Exchange. Tonghua Dongbao Pharmaceutical also surged 5.5 per cent to 30.07 yuan.

Global investors take their positions ahead of China’s inclusion in MSCI index

Shanghai Electric jumped 4.1 per cent to 6.15 yuan. Tongwei and Heilan Home rose 2.5 per cent and 2.3 per cent to 12.95 yuan and 13.68 yuan, respectively. Shandong Buchang Pharmaceuticals gained 1.7 per cent to 50.62 yuan.

The newcomers outperformed the overall markets on Tuesday, as mainland China’s benchmark Shanghai Composite closed up 0.6 per cent, or 18.09 points, at 3,192.12.

Hong Kong’s Hang Seng Index ended down 1.2 per cent at 31,152.03, weighed down by index heavyweight Tencent Holdings, which fell 3.4 per cent to HK$398.00.

Meanwhile, MSCI deleted 12 stocks from the previous provisional list.

These drop-outs, most of which are property developers and securities firms, fell across the board on Tuesday.

Real estate developer Shanghai Lujiazui Finance and Trade Zone Development declined 1.2 per cent to 17.96 yuan.

US$400 billion expected to flow into Chinese stocks after MSCI inclusion: top fund manager

Brokerage firm Sealand Securities also dropped 1.2 per cent to 4.11 yuan. Rivals Pacific Securities and Northeast Securities lost 0.7 per cent and 0.6 per cent to 2.83 yuan and 7.77 yuan, respectively.

Department store operator Shanghai Bailian Group tumbled 1.7 per cent to 11.20 yuan.

Hainan Airlines Holding, the Shanghai-listed unit of debt-ridden HNA Group, remains suspended.

MSCI said on Tuesday the 234 A shares will be partially added in a two-step process in June and September.

During the first step, these shares will be included at a 2.5 per cent partial inclusion factor. The second phase in September will see the factor increase to 5 per cent. After the process, the Chinese A shares could roughly account for 0.78 per cent weighting in the MSCI Emerging Markets Index.

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