Earlier this month, China ETFs retreated after index provider MSCI said it is again delaying the inclusion of China A-shares, the stocks trading in Shanghai and Shenzhen, in its widely followed emerging markets indexes.
MSCI attributed its decision to push off on China A-shares inclusion to accessibility of the A shares market for global investors, despite significant regulatory improvements out of Beijing. Specifically, China’s quota system remains a major hurdle for fund investors in the event of redemptions.
“In addition to the worsening growth outlook, foreign investors have been pulling out amid a surge in debt. Corporate and household borrowing amounted to 215 percent of GDP at the end of the first quarter, the highest level since Bloomberg Intelligence started compiling data in 2003,” according to Bloomberg.
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iShares China Large-Cap ETF