On May 31, 2018 the Financial Times covered MSCI’s inclusion of China’s A shares in its benchmark emerging markets index. As the byline explains, “(a)dding 233 companies to MSCI Emerging Markets index will connect China’s market to the world.”
This is only the first step in a major transformation of emerging market investing.
/According to the article, “(a)lthough only 233 A-shares will be added in the first tranche to the index — which is followed by investors controlling $1.6tn in assets — to many, this represents a pivotal moment. Subsequent planned additions are set to radically reshape the global equity landscape.”
MSCI and numerous governance rating and research agencies question the quality of Chinese listed companies’ ESG disclosures. Governance risks – dilution, dominance of major shareholders lack of transparency and opaque debt – remain, but the size of China’s market requires investors to consider it.
Registered users may read the article on the Financial Times internet site.