The Shanghai and Shenzhen Stock Exchanges imposed limits on the length of voluntary trading suspensions, effective from 27-May.
It was set at three months for companies involved in major asset restructuring and one month for companies conducting private placements.
The aim is to protect investor interest and to raise the odds for MSCI to include China’s A-shares in the MSCI Emerging Market (EM) Index, tracked by USD1.5tn of assets.
Currently, around 10% of stocks on the two exchanges are still suspended. MSCI is scheduled to announce its decision on 15-June.
Based on earlier statements, MSCI plans to include China’s A-shares in gradual steps, starting with only 5% of the free-float market capitalization of the A-share components in MSCI’s China Index.
This would imply only 1.3% share for China’s A-shares in the MSCI EM Index. Also, the implementation would only take place after May 2017.
Overall, the inclusion of China’s A-shares is expected to go ahead but unlikely to see significant inflows.
On FX, PBoC’s mid-point was fixed higher again today to a new high for the year at 6.57900 vs 6.57840 yesterday.
This is the highest fix since February 2011. The weaker CNY yesterday probably took its cue from the stronger USD last Friday rather than a shift in PBoC FX policy.
Onshore USD-CNY is stable this morning around 6.5822 with CNY down 1.6% vs USD so far in May.
The CFETS CNY index is down by 0.15% this morning. However, it held steady in May but is down 3.7% year-to-date.
