If you checked the MSCI Emerging Market Index last Friday, you would have noticed the inclusion of 226 new A-Shares of Chinese companies into the benchmark. This is the first step of a very gradual introduction which will continue in September and A-shares only represent 0.4% of the index at present.
While it might seem insignificant, it has triggered a wave of forced buying by passive strategies and could ultimately have a large impact on the composition of the index and investors’ investment universe. In fact, if all those stocks were fully included along with additional mid cap names over time, China could come to represent 50% of the Emerging Markets of which 28% from A-Shares!
What does this mean for your portfolio? Click here to learn more.