UK index compiler FTSE Russell to add Chinese stocks to its global equity gauges

FTSE is the second compiler of global indexes to add the mainland’s yuan-traded A shares to its benchmark and expects the inclusion to bring an inflow of US$10 billion.

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Investors monitor stock prices at a securities company in Shanghai on September 25, 2018. Photo: AFP

Published: 9:19am, 27 Sep 2018Updated: 10:54pm, 27 Sep 2018

FTSE Russell, the UK-based index compiler, said it will add Chinese stocks to its benchmarks starting next June, marking further integration of the world’s third-largest stock market into global equities.

The inclusion will be implemented in three stages through March 2020, using 25 per cent of the investible market capitalisation of the yuan-traded A shares from small- to big-caps covered by FTSE, the index compiler said in a statement on its website on Thursday.

Upon completion of the first stage, Chinese stocks will represent an initial 5.5 per cent of the FTSE Emerging Index, which will draw an inflow of US$10 billion from passively-managed funds, and the weighting in the FTSE Global All Cap Index will be at 0.57 per cent, according to the statement.

FTSE is the second compiler of global indexes to add the mainland’s yuan-traded A shares to their benchmarks after MSCI, which announced the A-share inclusion in June to prompt overseas investors to buy a combined 126.4 billion yuan of Chinese stocks since then.

Global index compilers are increasingly expanding their foothold on China’s A-share markets that are valued at US$5.9 trillion, as Chinese regulators have made it easier for foreigners to buy the stocks by starting connect programmes with Hong Kong and have scrapped restrictions on fund repatriation and lock-up periods.