In this adjustment, the inclusion factor of Chinas A-share market will be increased from 15% to 20%, and will take effect after the closing on November 26. It is worth noting that the MSCI China Index will increase 204 A shares, 189 of which are mid cap stocks. The weight of China A shares in the MSCI China Index and the MSCI Emerging Market Index will be increased to 12.1% and 4.1% respectively.
Mid cap stocks included for the first time
The highlight of MSCIs third step to enhance the inclusion of A-share weight is that mid cap stocks are included in the MSCI system for the first time, which will bring more opportunities for international investors to participate in the A-share market.
For the first time, it was included in mid cap stocks with an inclusion factor of 20%. Since the weight of a shares in the global emerging market index has been increased from 2.5% to 4.1% after this adjustment, the inclusion of mid cap stocks will bring in the passive incremental capital scale. It is estimated that the passive capital inflow scale is about 6.7 billion US dollars (nearly 46.8 billion RMB), higher than the previous two adjustments. Zhang Jun, chief economist of Morgan Stanley Huaxin securities, said in an interview with Securities Daily.
The included mid cap industries are mainly focused on computer, electronics and medicine, so the weight of relevant industries will increase. The industry weight that MSCI has included before will slightly change under the inclusion of mid cap stocks, but MSCI component stocks are still mainly concentrated on banks, non-bank, food and beverage and pharmaceutical biology. Zhang Jun said.
In an interview with the Securities Daily, he Nanye, a special researcher of Suning Financial Research Institute, said that the expansion showed two new features: first, the addition of mid cap stocks was absolutely positive for the trend of mid cap stocks. Second, the new capital will be far ahead of twice, and the incremental capital is conducive to the upward expansion of the current A-share market.
Incremental capital or far ahead twice
The further increase of A-shares weight into MSCI will undoubtedly bring more incremental capital to A-share. He Nanye initially predicted that the incremental capital will be between 250 billion yuan and 300 billion yuan.
In the short term, the increase of funds will boost the share price and market value of the main sectors of a share. At the same time, the newly added mid cap stocks are conducive to balancing the stock price trend of different domestic sectors and helping companies with medium market value to get out of a better stock price. He said.
When talking about the medium and long-term impact, he Nanye also said: on the one hand, international investors will have a deeper understanding of A-share. While expanding the capacity of passive incremental capital, more active incremental capital will be attracted to participate in A-share investment. On the other hand, the introduction of more foreign investors, the market can more fully assess the value of the company, so that high-quality listed companies can get a better valuation, improve the survival of the fittest in the capital market and optimize the role of resource allocation. At the same time, domestic investors can enrich and improve their investment methods and means by learning from their more mature investment ideas, which is conducive to the cultivation of a more mature domestic investor system. .
Since this year, in addition to MSCI gradually increasing the weight of a shares, other international indexes have accelerated the pace of inclusion of a shares. At present, FTSE Russell and S & P Dow Jones index have successively included a shares.
First of all, China has benefited from the continuous adjustment of its own economic structure. Monetary and fiscal policies have made efforts to release policy dividends. The gradually released economic development potential and relatively stable development are expected to attract the continuous inflow of foreign institutional funds. Second, greater return on capital attracts foreign capital to continue to flow in. At present, the valuation of Chinas capital market is relatively low, and the weight of value investment continues to rise. Foreign investment will continue to flow into China under the attraction of high capital return.
In order to better connect with the international market, he Nanye believes that Chinas capital market should further improve the relevant systems. First, we need to strengthen the reform of the capital market, improve the system and mechanism, improve the inclusiveness and toughness of the capital market, so that the capital market can effectively hedge the inflow and outflow of capital and enhance its immunity. At the same time, we should give full play to the regulatory role of the market mechanism, reduce the impact of policies on the capital market, and gradually build a standardized, transparent, open, dynamic and resilient capital market. Second, we should further strengthen the openness of the capital market, constantly increase the proportion of A-share overseas investors, and gradually change the structure of investors from retail investors to institutional investors. Third, the regulatory authorities should strengthen the monitoring of the investment behavior of overseas funds, properly make a forward-looking early warning, and have corresponding countermeasures in the face of large amount of capital inflow and outflow.
Source: responsible editor of Securities Daily: Yang qian_nf4425