Where next for China A-shares?

MSCI decided not to include A-shares in EM index

Despite significant improvements in foreign investment access and shortened repatriation timeframes, the MSCI disappointed investors last week by deciding not to include China A-shares in its Emerging Markets index, saying concerns remained over transparency.

Although analysts expressed their shock, markets rose following the decision, with the Shanghai Composite gaining 1.6% to reach 2,887 on Wednesday 15 June. It could be argued an inclusion would have caused the shares to rally, and provided a much-needed boost to a market that is down more than 18% year to date - one of the worst-performing equity markets in the world. The MSCI said it had gathered feedback from market participants and, although it recognised many reforms had already been implemented by the Chinese authorities, international institutional investors indicated they would...