MSCI tracks dozens of other Chinese stocks from global indexes

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MSCI removed dozens of Chinese stocks from its global benchmarks for the third consecutive quarter, in a move that will increase the weight of India and other Asian markets in emerging market indices.

The US index giant will remove 60 constituents from its flagship MSCI China index, which covers about 85% of the entire global equity universe, including H-shares, red chips and U.S. depositary receipts, according to its latest quarterly analysis published this week.

This brings the number of Chinese stocks removed from MSCI Global Standard indices to nearly 200 in 2024 alone, after MSCI removed 66 constituents in February and 56 companies in May.

Among the companies to be removed from the index are investment holding company First Capital, local brokerage GF Securities, listed online gaming company Kingnet Network and conglomerate founded by Xu Wenrong Hengdian Group.

This article was previously published by Ignites Asia, a title owned by FT Group.

At the same time, it will add two new companies, hydropower developer Huaneng Lancang River Hydropower, one of the biggest additions to the emerging markets index as measured by company market capitalization, and electronics maker Victory Giant.

These changes will be made from 30 August and will also be applied to the provider’s MSCI All Country World Index and Emerging Markets Index.

MSCI’s move could force index-tracking funds to sell their Chinese investments, intensifying the exodus from the world’s second-largest market and shifting allocations to other emerging markets such as India.

MSCI will also add seven new Indian companies to the indices, including telecom firm Vodafone India and electronics maker Dixon Technologies. It will also remove Bandhan Bank from the indexes.

In May, the index provider added 13 Indian stocks to its indices and welcomed five new Indian firms to its benchmarks in February.

Meanwhile, MSCI’s ex-China emerging market index, which was launched in 2017, has gained prominence over the past three years amid Beijing’s strict zero-covid policies and a weak economic recovery.

BlackRock’s iShares MSCI Emerging Markets ex China ETF, which is benchmarked against the MSCI Emerging Markets ex China index, has seen its assets grow to $14.9 billion as of Aug. 12, from just $164 million dollars at the end of 2020, based on its official data. website and Bloomberg.

In contrast, the iShares MSCI China ETF saw its market capitalization drop to about $4.3 billion as of Aug. 12.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignitesasia.com.