In the past two years, A-share has completed a magnificent first stage of internationalization. Since 2018, MSCI, FTSE Russell, S & P Dow Jones and other international indexes have started to include a shares, and the proportion of the index has gradually increased.
FTSE Russell will increase the proportion of A-share inclusion factors to 5% and 15% respectively in June and September 2019, and decide to increase it to 25% in March 2020. The tracking capital scale of FTSE Russell global market index and emerging market index is US $1657.7 billion and US $49.3 billion respectively. After three steps, the proportion of a shares in FTSE Russell global market index is 0.11%, 0.33% and 0.56% respectively, and the proportion in emerging market index is 1.11%, 3.33% and 5.56% respectively. It is estimated that the three steps will bring about US $2.4 billion, US $4.8 billion and US $4.8 billion Gold growth potential.
In addition, the S & P Dow Jones Emerging market index was incorporated into A-share by 25% in September 2019. The tracking capital scale of the S & P Dow Jones Emerging Market BMI index is US $189.8 billion, and the proportion of A-share in the index is 6.2%, which is expected to create about US $11.8 billion of capital increment potential.
It can be seen that the three international indexes will bring more than 100 billion US dollars of foreign capital inflows to the A-share market. Since 2018, the scale of foreign capital inflows through the North has indeed begun to enlarge. Since 2018, the scale of foreign capital inflows has exceeded 600 billion yuan, and foreign capital is gradually becoming another important pole of the A-share market.
However, after the end of the first phase of the international index a, a shares will enter a period of slowing down of the pace of internationalization. So far, the three indexes have no plans for further expansion.
To this end, Guosheng securities strategy analyst Zhang Qiyao said: International Index inclusion is not only an index meaning, but also a global asset allocation certification. The pace of foreign investment will not stop due to the interruption of index expansion. From the experience of Taiwan, South Korea and other markets, during the interval of MSCI expansion, foreign investment will continue to flow in unilaterally. We have also clearly put forward MSCI capacity expansion will be postponed, but it will not affect the continuous inflow of foreign capital. At present, we maintain the judgment of annual increase of foreign capital of 200-300 billion.
Although there will be no change in the inflow trend of domestic and foreign capital during the Na a gap period, the market is also concerned about when the three international indexes can start the next stage of integration.
Corresponding to the overseas market, at present, there are three major stock index futures, Shanghai Stock Exchange 50ETF options and Shanghai Shenzhen 300etf options to be launched in domestic A-share derivatives. However, compared with the overseas market, the domestic exchange currently provides investors with A-share derivatives which are not rich enough to meet the needs of investor risk management as a whole.
However, according to reporters, regulators have made great efforts to enrich derivatives products in the past two years, and some products waiting for many years have been approved in the near future. In addition, the Hong Kong stock exchange is striving to launch multi-party programs and products to make this constraint no longer a problem.
Zhang Xia, chief analyst of China Merchants Securities strategy research, summed up the last three problems as the operation and management risks brought by different trading mechanisms or systems at home and abroad. To solve these problems requires a relatively long-term market infrastructure, and it is difficult to achieve adjustment in the short term, which is also a process for a shares to gradually integrate with the international market, he said. Any of the above improvements will help to increase the weight of a shares in the international market index.
However, looking at other reference markets, it will take a while for a share to achieve 100% Inclusion in the major international indexes, not overnight.
Based on the experience of South Korea, we can look forward to the pace of Chinas A-share being included in various international indexes in the future. It took six years for South Korean stock market to be fully included in MSCI, slow first and then fast. However, compared with South Korea, Chinas economy is huge, and Chinas financial opening up is accelerating. Considering the important influence of A-share on the international index, the speed of the international indexs inclusion of Chinas A-share may exceed that of South Korea. According to Zhou Zipeng, an analyst at Everbright Securities.
Source: responsible editor of 21st century economic report: Yang Bin_ NF4368