amsterdam - Chinese stocks may get a large group of investors there. Tonight decided MSCI index builder or shares of mainland China are included in a major index.
Tonight decided MSCI index builder or shares in Shanghai and Shenzhen are included in its Emerging Markets inndices.
'I estimate the probability MSCI green light indicates greater than 50%,' says principal investments in Asia Raymond Chan asset manager Allianz GI.
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The step is important because Chinese companies will reach a large group of new investors in one fell swoop. MSCI's main index builder in the world, and a lot of investment products based on the indices.
Chinese stocks were coming herein, the providers of these funds they must take. The MSCI Emering Markets Index are products with an estimated value of $ 1.5 trillion based.
Leading up to the decision, the exchanges of Shanghai and Shenzhen were hard in recent weeks. China's stock market has a market capitalization of $ 8 trillion. Only the S amp; P, with a market capitalization of $ 19 trillion is greater, as calculated Financial Times.
However, the MSCI EM index consists of 26.8% of Chinese companies listing abroad, such as New York or Hong Kong.
So far MSCI has in China listed companies held out. Foreign investors had little access to the market, and the Chinese currency renminbi was monitored strictly by the government.
Last year, MSCI pointed Chinese equities therefore still the door. Now the odds are better, Chan thinks. 'MSCI came up with a number of issues that needed to be addressed, it has made the government work. '
What happens in the short term with the prices of Chinese stocks, Chan finds difficult to predict. 'Between the ordeel of MSCI and the time the shares are actually included in the index, is easily a year. '
But in the long term it is good news for the Chinese market. Chan: '95% of the Chinese market is in the hands of private investors. That do not invest based on fundamentals, such a good cash flow. A company that performs well, so do not need to rise on the stock market. This makes the market very speculative. But when Chinese stocks are in the MSCI index, which also attracts institutional investors, the market matures. '