Global index giant MSCI will add stocks trading on Shenzhen’s ChiNext board to its indexes for the first time, allowing foreign investors to tap the tech-focused board by investing in the indexes.
MSCI has decided to add 26 Chinese A-shares to the MSCI China A Large Cap Index, of which 18 are ChiNext stocks, according to its press release on Tuesday. In addition, the company will raise the inclusion factor of 238 existing constituents in the index from 5% to 10%, which means 10% of total market capitalization of the shares will be added to MSCI indexes.
After all the changes become effective after the market closes for the day on May 28, Chinese A-shares will have an aggregate weight of 5.25% and 1.76% in the MSCI China Index and MSCI Emerging Markets Index, respectively, according to MSCI.
The move is the first of MSCI’s three steps to increase the weighting of Chinese A-shares in its indexes this year. MSCI will increase the weighting of large-cap Chinese A-shares by raising the inclusion factor to 15% in August and to 20% in November. Additionally, the company will add mid-cap A-shares, including eligible ChiNext shares, with a 20% inclusion factor in November.