According to the plan, this change will take effect before the opening of the market on September 23.
The Second Step of Getting Rich
According to the arrangement previously announced by FTSE Russell, the first stage of A-share incorporation will be divided into three batches, with a progress of 20%, 40%, 40%. After the implementation of the three steps, the proportion of A-share incorporation will be 25% of the investable part. The first batch will start at the same time as the quarterly review of FTSE GEIS in June 2019; the second batch will be scheduled for September 2019; and the third batch will be completed at the same time as the semi-annual review of the index in March 2020. The inclusion factor of A shares will also increase from 5% in the first batch to 15% in the second batch, and ultimately to 25%.
For Chinas A shares, which are included at 25% of their respective investable market capitalization, FTSE Russell previously explained that this was due to the expected inflow of capital, stock interconnection mechanism and offshore RMB (CNH) capacity.
In the early morning of August 24, Beijing time, Fushi Russell announced the quarterly adjustment results of Fushi GEIS in September 2019. FTSE GEIS has added 87 new Chinese A shares, including 14 large A shares, 15 medium A shares, 50 small A shares and 8 micro A shares.
According to the plan, this change will take effect before the opening of the market on September 23. According to previous official estimates by FTSE Russell, the second step of expansion in September 2019 is expected to bring passive inflows of $4 billion to A shares.
Three big index giants gather, A shares are expected to usher in 100 billion live water
It is worth mentioning that in addition to FTSE Russell, MSCI and S&P Dow Jones will also focus on A shares in the near future. Three major international index giants gather together, A shares are expected to get hundreds of billions more incremental funds!
Earlier, MSCI announced that the promotion of A-share inclusion factor will be divided into three steps: in May 2019, MSCI will increase the inclusion factor of Chinese A-share market from 5% to 10%, while the GEM A-share market will be included in the MSCI index system with 10% inclusion factor. In August 2019, MSCI will increase the inclusion factor of Chinese A shares from 10% to 15%. In November 2019, MSCI will eventually increase the inclusion factor of Chinas A-share market from 15% to 20%, and include 20% of Chinas A-share market (including potential GEM indicators) into the MSCI index system.
In the early morning of August 8, Beijing time, MSCI announced the second step of the A-share expansion plan: 260 existing Chinese stocks will be increased from 10% to 15%, and 8 Chinese A-shares will be added by 15%. After joining, Chinas A shares accounted for 2.46% of the MSCI Emerging Market Index. In addition, MSCI updates the list of Chinese stocks. This list will become the potential list of MSCIA shares in the third step of factor promotion.
In the semi-annual review in November, MSCI will complete the third step of improving the A-share inclusion factor, by which time the A-share inclusion factor will be raised to 20%.
After this expansion, the weight of A shares in MSCI Emerging Markets Index will be increased from 1.7% to 2.5%. Based on the static estimation of the scale of funds tracking MSCI index, the adjustment is expected to bring about about about about 22.7 billion US dollars (about 160 billion RMB, including passive and active funds) for A shares. Enter.
The S&P Dow Jones Index will also issue a list of Chinas A-share adjustments incorporated into its index system.
Earlier, on December 5, 2018 (US local time), S&P Dow Jones announced the results of its 2018 market classification review, announcing that qualified A-shares traded through the Shanghai-Shenzhen-Hong Kong Stock Exchange mechanism would be included in its global flagship index system, classified as emerging markets.
According to its plan, Chinas A-share adjustment list will be published on September 6, which will be included in its index system. A-share will be included in 25% of the inclusion factor at one time. This change will take effect before the opening of the market on September 23. Previously published preliminary screening list, 1241 A shares were included.
The entry of the three major index giants will bring a huge amount of living water to A shares.
Wang Hanfeng, an analyst at CICC, said that MSCI would announce at the end of February whether to increase the proportion of A shares from 5% to 20%. If the results are positive, it is estimated that the related inflows will reach $66 billion. In addition, institutions such as FTSE (FTSE Emerging Markets Index) have also said that they will substantially increase the proportion of A shares, with related capital inflows reaching $11 billion. These International Indices increase the proportion of A shares, which is expected to bring about net capital inflows of 80 billion US dollars (or 540 billion RMB) or more in the next 1 to 1.5 years.
CICC estimates that the average annual net inflow of foreign capital into A shares in the next 10 years may be between 200 billion and 400 billion yuan.