Bucking global market trends on Tuesday, Chinese mainland stocks and related A-shares exchange traded funds inched higher ahead of MSCI’s indexing decision due in the evening.
The db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), the largest China A-shares-related ETF, rose 0.7% Tuesday. ASHR has declined 18.5% year-to-date.
Chinese markets strengthened on bets that MSCI could add China A-shares to one of its flagship indices, which could bolster A-shares demand among asset managers who track MSCI benchmarks.
If the MSCI begins including China A-shares in its indices, Chinese shares would make up 1.1% of the indexer’s popular Emerging Markets Index tracked by $1.5 trillion in global funds, the Wall Street Journal Reports.
HSBC projected the inclusion could add an additional $20 billion to $30 billion into Chinese stocks over the next year.
Looking further out, MSCI estimated that Chinese stocks’ index weighting could grow toward 20% in the future if Beijing loosens controls over foreign access.[related_stories]