China welcomes MSCI decision on A-share weight increases

China's top securities regulator said Friday that it welcomes to significantly increase the weight of A-shares in its global indexes.

The move represents the recognition of China's efforts in reforming and opening up its capital market by international investors, as well as a vote of confidence in the country's stable and healthy economic development, Chang Depeng, spokesperson of the China Securities Regulatory Commission (CSRC), told a press conference.

Chang made the remarks while commenting on MSCI's decision to increase the weight of the yuan-denominated A-shares in its indexes. The global index provider plans to raise the inclusion factor from five to 20 percent in three stages this year.

Chang said the CSRC welcomes long-term overseas capital to invest in the country's domestic capital market.

The commission will continue to improve the capital market infrastructure and cross-border trading mechanisms, enhance regulation and promote further opening-up of the domestic equity market and other derivative markets, he said.

China Securities Regulatory Commission (CSRC), Beijing. /VCG Photo

MSCI's decision came after an initial inclusion of China A shares since mid-2018, with the inclusion factor currently capped at five percent.

The successful implementation of the initial 5 percent inclusion of China A shares has been a positive experience for international institutional investors and has fostered their appetite to increase further their exposure to the mainland China equity market, said Remy Briand, MSCI managing director and chairman of the MSCI Index Policy Committee.

Upon the completion of the plan, there will be 253 large cap and 168 mid cap China A-shares, including 27 ChiNext shares, on a pro forma basis in the MSCI Emerging Markets Index, representing a weight of 3.3 percent in the pro forma index, said the statement.

The decision came after MSCI consulted a large number of international institutional investors, most of which backed the three-step proposal.

Based in New York City, MSCI provides equity, fixed income, hedge fund and stock market indexes, and asset portfolio analysis tools for global investors.

(ASIA PACIFIC DAILY)