Update | MSCI turns down Chinese A shares from market index in 2015; may look again in 2016

Global index provider MSCI rejected on Tuesday the addition in 2015 of Chinese A-shares in one of its key benchmark indexes for global stock markets, dealing a setback to Beijing’s efforts to further open up its domestic capital markets.

MSCI said the China-listed shares will eventually be incorporated once outstanding market accessibility issues are resolved, but the next review for Chinese shares would be in 2016.

Remy Briand, MSCI Managing Director and Global Head of Research, said in a teleconference on Wednesday in Hong Kong that the inclusion of China’s A shares may begin anytime even before the next annual view in June next year as soon as the accessibility issues are resolved.

“The creation of a working group between MSCI and the China Securities Regulatory Commission is aimed to resolve investors’ concerns over quota allocation, capital mobility restrictions and beneficial ownership of investments,” Briand said.

He said the working group will involve executives on both sides and aims to spur the further opening of China’s A shares market and its inclusion in emerging-market benchmarks. The upcoming Shenzhen-Hong Kong stock connect programme could be the trigger point for MSCI to reconsider the inclusion process.

Mark Konyn, the chief executive of Cathay Conning Asset Management, said: “there was a wide dispersion of expectations among international investors and that decision taken is pragmatic and sensible.”