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onstituents in MSCI benchmarks widely used by global investors, as the figure refe
上海乌托邦rs to how much of a stock’s free-float market capitalization is included in the indexes.
The move is expected to elevate the A-share market’s weighting in the MSCI Emerging Markets Index from the cur
rent 1.76 percent to more than 2.1 percent, according to earlier disclosures from MSCI.上海乌托邦女神会所
This is also part of the index provider’s plan to increase A shares’ weighting i
n its benchmarks in three steps, with the first step of doubling the inclusion factor to 10 per
上海乌托邦cent having been implemented in May and the final step of raising it to 20 percent due to take place in November.
According to estimates from China International Capital Corp Ltd, the weighti
ng increase in August may trigger capital inflows of $22.7 billion into the A-share constituents.上海乌托邦女神会所
Zhang Xia, chief strategist with Shenzhen-based China Merchants Securities, said $3.6 billion in passively-ma
上海乌托邦naged overseas funds tracking the index－or worldwide portfolios whose allocations synchronize with every c
hange in MSCI indexes－is expected to flow into the A-share market during trading on Aug 27.
The inflow amount of actively managed funds, which use MSCI indexes as i上海乌托邦女神会所
nvestment benchmarks, however, may be dampened by the recent depreciation of th
e Chinese yuan and recent escalations in trade tensions that hurt global risk appetite, Zhang said.上海乌托邦
Ben Luk, senior multi asset strategist at State Street Global Markets, said the amoun
t of passive fund inflow triggered by the index adjustment may be too little to cause an
上海乌托邦女神会所y market rally, but policies to stabilize the Chinese economy will lend substantive support to the A-share market.
“We believe more trade uncertainty should lead to more stimulus certainty, all of whic
h should benefit domestic equities,” Luk said, adding that there is a growing probability that China’s central上海乌托邦
bank will lower funding costs across the real economy via a combination of rate tools.
Cuts in the reserve requirement ratio and shorter-term liquidi
ty rates, as well as additional bill issuance, may be in the tool kit of the Peopl上海乌托邦
e’s Bank of China to help keep a stable rate in the banking system, according to Luk.
“The Chinese economy is faced with greater uncertainty, but proper credit allocat上海乌托邦女神会所
ion and monetary stimulus could help lift growth and stabilize A shares in the second half of the year,” Luk said.
On Wednesday, the benchmark Shanghai Composite Index shed 0.3 percent to 2768.68 points, wh
ile the smaller Shenzhen Component Index closed 0.5 percent lower at 8814.74 points.