MSCI, whose full English name is Morgan Stanley Capital International, is an international company that provides global indexes and related derivatives. Its MSCI index is widely referenced by investors, and it is used by investment professionals all over the world, including portfolio managers, brokers, exchanges, investment consultants, scholars and financial media.
MSCI has compiled local market indices and global composite indices for different markets around the world, which are the benchmark indices for most funds investing in global markets. In other words, fund companies will allocate stocks according to the company weights in the MSCI index, so that their fund performance will not deviate too much from the benchmark index.
At present, MSCI China Index only includes China companies listed overseas, mainly those listed in Hongkong. It is expected that with the opening of the capital market, A shares will eventually be included in the index, which means that more and more global funds will allocate A shares.
According to the fact that the local stock market will rise obviously after other emerging markets are included in MSCI index or their weights are increased, the inclusion of A shares in MSCI China index and the increase of A shares' weights in the future will promote the rise of A-share market.
First, the significance of the inclusion of A shares in MSCI
1, MSCI index is the most influential index in the world, with many products. The so-called inclusion of A shares in MSCI refers to the inclusion of A shares in the MSCI Emerging Markets Index, a major index product.
2. From the changes in the composition and proportion of MSCI emerging market index in history, we can see the changes in the economic power of emerging markets. The most important event in the past two decades is the economic rise of China. As the second largest economy in the world, any international index that does not include China A shares is incomplete.
3. From this perspective, it is a historical necessity for MSCI Emerging Markets Index to be included in China A shares.
Second, the impact of A-share inclusion in MSCI.
1. China is expected to bring nearly10 billion RMB of overseas capital in a short period of time after it is included in MSCI. If all of them are included in the future, it will bring 2.4 trillion yuan of incremental capital.
In addition, at present, 28 MSCI funds in China have passed the examination and approval or are pending approval, and most of them choose to follow the MSCI China A-share International Connect Index and invest in leading financial consumers. It is conservatively estimated that the incremental funds are around 27.4 billion.
2. The proportion of foreign shares in the market value increases, and the promotion of discourse power will change the valuation system and market style of the A-share market. According to MSCI's ultra-low configuration and market value ratio, it is good for big finance and big consumption leaders.
3.a shares will be included in the initial stage of MSCI, or it will bring 654.38 billion yuan of overseas funds to allocate A shares. The total size of funds tracking MSCIA-share index is about 4.5 trillion US dollars, and the weight of A shares is between 0. 1%-2.5%.
4. At the same time, under the inclusion ratio of 5%, the weights of A shares in MSCI global, emerging and Asian market indexes are 0.8%, 0. 1% and 1. 1% respectively. Considering the global assets tracking the above index, it is estimated that the potential capital inflow brought by MSCI's inclusion in A shares is about 21200 million USD. ?
Extended data:
Changes of Taiwan Province Province and South Korea after their inclusion in MSCI.
Taiwan Province Province 1
Taiwan Province stock market was included in MSCI Emerging Markets Index from 65438 to 0996, and it took nine years to be fully included. There are four main changes.
1) has a strong correlation with S&P 500. The stronger the correlation, the more it rises and the less it falls.
2) The turnover rate is reduced.
3) the volatility is reduced
4) The valuation center declines.
From the perspective of PB, before and after the stock market of Taiwan Province Province was included, the PB decreased from 2.3 to about 1.5.
2. Korea
South Korea joined MSCI faster, and it only took six years.
1) has a strong correlation with S&P 500. Similarly, after the inclusion of MSCI, the correlation between Korean stock market and American stock market has also improved.
2) The turnover rate is reduced.
3) The fluctuation is flat and the valuation center is flat.
However, the volatility and valuation center of the Korean stock market have not changed much. The main reason is that the volatility and valuation of Korean stock market were not high before it was included: before it was included, the average volatility of Korean stock market was 19.4%, and that of Taiwan Province province was as high as 30%; Before being included in the valuation, the PB of Korean stock market was around 1, which itself was underestimated.
References:
Baidu encyclopedia -MSCI? Baidu Encyclopedia -MSCI China Index