China ETFs Could Strengthen as FTSE Russell Set A-Shares Inclusion

Following on the heels of MSCI’s decision to raise Chinese mainland stock exposure in its benchmark international indices, FTSE Russell also promoted China A-shares to emerging market status, fueling further demand for Chinese equity exposure and potentially enhancing country-related exchange traded funds.

FTSE Russell promoted China A-Shares to Secondary Emerging market status following its September 2018 annual country classification review.

“FTSE Russell is pleased to announce that the China A Shares market will be promoted to Emerging Markets status and included in FTSE’s global equity benchmarks from June 2019. China will also be added to our Watch List for possible inclusion in FTSE’s global bond indexes. The Chinese authorities have continued to introduce reforms designed to open their market to international investors and have transformed their economy into the second largest in the world. FTSE Russell was the first international index provider of mainland China benchmarks 20 years ago and we will continue to work with our global clients to provide benchmark and analytic solutions to facilitate their equity and fixed income investments in the region,” Mark Makepeace, CEO of FTSE Russell, said in a note.

The ongoing initiatives of Chinese authorities have helped improve global investor access to Chinese A-shares through reforms such as the Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign Institutional Investor (RQFII) initiatives. Through these improvements and the recent enhancements to the Hong Kong Stock Connect program, China A-shares now meet the requirements for the FTSE Emerging Index.

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