MSCI Dips Toe into China A-share Pool

June 07, 2018 | David Hernandez, CFA, Senior Research Analyst, Non-U.S. Equities

On May 31, 2018 MSCI decided to add 226 China large-cap A shares to the MSCI Emerging Markets (EM) Index. What is an A share? They are shares of Chinese companies that trade on local Chinese stock exchanges. Historically, foreign investors have had limited — if not zero — access to these markets. Three years ago, China launched its Stock Connect program, improving the accessibility to A shares and prompting their inclusion in the broad EM index. If A shares were just recently added, what constitutes the current 30.5% exposure to China? The China portion of the index is mainly comprised of the following:

  • H Shares – Chinese companies incorporated in China and listed on the Hong Kong stock exchange.
  • Red and P Chip – Chinese companies incorporated outside of China and listed on the Hong Kong stock exchange.
  • Overseas – Chinese companies listed on an overseas exchange, for example Alibaba which is listed in the NYSE.

By September 2018 China A-shares will constitute 0.8% of the index. This exposure represents a 5% inclusion rate of the A Share market and is tiny compared to the 16.2% exposure if MSCI used a 100% inclusion rate. While currently small, investors should expect A shares to become a larger portion of the index over the coming years, increasing the EM opportunity set.

Print PDF


The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

David Hernandez, CFA
Senior Research Analyst, Non-U.S. Equities

Get to Know David

Related Content


Are Low Default Rates a Reason to Reach for Higher Yields?

As indicated in Moody’s 2018 Annual Defaults Report, recent default rates on corporate debt have been significantly below long-term historical…

Hedge Fund Favorites Rebound to Start 2019 chart of the week


Hedge Fund Favorites Rebound to Start 2019

This week’s chart shows the performance of Goldman’s portfolio of hedge fund favorites, which draws from over 800 fundamental-driven hedge…

U.S. Equities Rally as Outflows Persist chart


U.S. Equities Rally as Outflows Persist

This week’s chart looks at Morningstar fund flow data among the broad category groups of U.S. equity, international equity, taxable…

IPOs Are Coming chart showing recent share prices since Pinterest, Lyft, and Zoom went public


IPOs Are Coming

This year has seen a burst of unicorn IPOs paving the way for Uber’s IPO later this year. While Lyft,…


Global Central Banks React to Slowed Economic Momentum

In 2017 the global economy underwent a synchronized move upward and investors saw equities throughout the world generate double-digit returns….


First Quarter Review of Asset Allocation

Heading into 2019, the primary risks facing financial markets were the trade war with China, the U.S. government shutdown, Brexit…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >