MSCI, the US index publisher, said yesterday it will include 234 Chinese large cap stocks in its global and regional indexes on June 1, setting the stage for capital markets in the world's second-biggest economy to get a boost from a potential surge of foreign money.
MSCI ejected nine companies and added 11 from the proposed MSCI China A Inclusion Index, slightly altering the expected weighting that the Chinese stocks will have in MSCI's emerging market index.
The 234 yuan-denominated stocks, or China A-shares, will represent an aggregate weight of 0.39 percent in the MSCI Emerging Markets Index at a 2.5 percent partial inclusion factor during the first step of the China entry. The second phase of the entry will take place in September, which will double A-shares' aggregate weight to 0.78 percent.
The long-awaited inclusion is expected to draw increased foreign capital into China's markets, where foreign ownership now amounts to about 2 percent.
The top five companies added to the China A Inclusion Index by market cap were Shanghai Electric Group, Zhangzhou Pientzehuang Pharmaceutical Ltd Heilan Home, Zhejiang Century Huatong Group and Perfect World .
Shanghai Electric shares rose some 4 percent on Tuesday after the news, while Heilan Home gained 2.4 percent.