Investors tracking the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) should not expect any major changes to their holdings after Morgan Stanley Capital International completed its annual review of its market classification and announced it will not include Chinese mainland-traded A-shares in its key emerging market index.
“International institutional investors clearly indicated that they would like to see further improvements in the accessibility of the China A shares market before its inclusion in the MSCI Emerging Markets Index,” Remy Briand, MSCI Managing Director and Global Head of Research, said in a note. “In keeping with its standard practice, MSCI will monitor the implementation of the recently announced policy changes and will seek feedback from market participants.”
Additionally, MSCI is keeping South Korea as an emerging market.
Consequently, EEM, which tries to reflect the performance of the MSCI Emerging Markets Index, will not experience any major shifts. The ETF currently includes a 25.8% exposure in Chinese companies and 14.7% in South Korea.[related_stories]