MSCI Starts Closing Its Open Door to China
Setting new conditions for adding more Chinese companies to its indexes could put out US political fire.
A Shanghai securities brokerage on the eve of Chinese shares joining MSCI indexes last year.
Photographer: Bloomberg/BloombergMSCI Inc. is showing new toughness on adding domestic China shares into its global benchmarks. The move will better protect investors and may dampen a political backlash in the U.S. after it already opened the door to more Chinese stocks. The new, almost insurmountable conditions will effectively start closing it on further entries.
Inclusion by the world’s most tracked index provider gives companies a de facto stamp of approval to passive funds and a feeling of cover to active investors. Over the past year, New York-based MSCI has been increasing the so-called inclusion factor of mainland companies to its indexes. On Wednesday, the factor reached 20%, bringing the total to 472 China A shares.