MSCI says no to Chinese stocks

MSCI has declined to include mainland Chinese stocks to its indices. Though recovered, the decision provided a jolt to Chinese benchmark stock index CSI 300, which was down more than 2% after the decision.

• Though recovered from the selloffs, Chinese stocks missed a rally which would have happened if the decision was affirmative, Inclusion of Chinese stocks would have seen billions of dollars flowing into the stock market.

MSCI-tracked funds are worth nearly $1.7 trillion so an inclusion would have seen $20-50 billion flowing into Chinese stock market.

However both Sanghai and Shenzen stock indices have recovered from the loss and moved into gains. There seems, not much can hold off the Chinese stock dragon, when it is rising.

• According to MSCI, though it will add Chinese stocks into its indices, several regulatory issues remain unsolved as of now.
• One of the key reason is Chinese markets are not open enough to international investors. Shenzen listed stocks represents more than 40% of A-share market cap but remains inaccessible to international investors.

China's benchmark stock index CSI 300 is currently trading at 5100, down -0.25% today. MSCI includes or not, it seems Chinese stock euphoria will keep on going, at least for now.