Choppiness in mainland equities has much to do with the way international institutional investors are positioning for the likely inclusion later this year of A shares in MSCI stock indices. There are huge implications for fund flows if next month's review by MSCI does add an initial expected US$110 billion of mainland market capitalisation to the global fund benchmarks. Goldman Sachs forecasts an average of US$17 billion of net annual buying of mainland shares over the next decade. Recalibrating the indices will make industrials the big winners of flows to mainland stocks - and telecommunications plays the big losers.
