From left to right: Li Hui (SZSE Vice President), Jiang Feng (SSE President), Song Yijia (Deputy Secretary General of Shanghai, Party Chief and Director of Shanghai Stated-owned Assets Supervision and Administration Commission), and Henry Fernadez (Board Chairman and CEO of MSCI)
Good news has come after 5 years of efforts: A-shares have been officially included in the MSCI (Morgan Stanley Capital International) Emerging Markets Index as of the market closing on May 31, 2018. It marks the official inclusion of A-shares after the MSCI started to solicit opinions on including A-shares in its Emerging Market Index in June 2013. After the market closing of today, a brief and grand launch ceremony has been held in the trading hall of the Shanghai Stock Exchange (SSE), and relevant officials of Shanghai Government, MSCI, the SSE, Shenzhen Stock Exchange (SZSE), as well as representatives from about 80 domestic and foreign financial institutions have witnessed another iconic moment of the opening-up of the Chinese capital market. SSE President Jiang Feng, SZSE Vice President Li Hui, and Board Chairman and CEO Henry Fernadez of MSCI delivered a speech, respectively.
The inclusion marks a new start instead of an end.
Jiang Feng said in his speech that including A-shares into the MSCI has gone through an enduring and struggling road, and it symbolizes an important step toward the internationalization of the Chinese stock market. The inclusion of A-shares into the MSCI has been the result of the construction of QFIIs, RQFIIs, Shanghai – Hong Kong Stock Connect and many other investment channels, the optimization of various trading mechanisms and the opening-up of relevant policies, and the recognition of the international investors towards the opening-up achievements of China's capital market, and it has manifested that China's capital market is gradually expanding its international reputation and global influence. This inclusion marks a new start instead of an end. The SSE will continue to stick to the marketized, legalized and international orientation in the reform, actively explore the new mode, new mechanism and new idea for the internationalization of the exchange, and urge the Chinese capital market to march toward a multi-level modern capital market with Chinese characteristics and more global competitiveness.
Li Hui said that the usher-in of overseas investors is an important method for the Chinese capital market to promote reform by opening-up, and the stock exchange, as the core institution and important platform of the capital market, has played an important role in it. The SZSE will actively respond to the issues of market concern, keep bringing the mechanism and services in line with international standards, and target to a wider scope of domestic and overseas investment groups with high-quality products and services.
Henry Fernadez said that one of the significant financial events in the first half of the 21st century is the inclusion of the Chinese financial market into the global financial system. And the integration of the 2nd largest stock market and the 3rd largest bond market in the world into the global capital market will exert huge influence. "Apart from the reform and opening-up of the Chinese capital market, I believe that international investors will improve their professional level and increase their investing experience in the progress of investing in China. In the future, the MSCI will strive to understand and encourage the reform and opening-up of the capital markets. And I hope it will help to include China's A-shares in the MSCI with fewer steps and at a larger scale."
A-shares smoothly included
Statistics after today's market closing show that the market has operated smoothly with continuous increase. Shanghai Composite Index reached the highest level of 3,098.08, presenting the greatest increase of 1.86%, closed at 3,095.47, up by 1.78%, and achieved the trading volume of RMB185.199 billion, slightly down compared with the last trading day. The MSCI – A-shares Board in the Shanghai market was up by 1.81% and achieved the trading volume of RMB76 billion, up by 14% compared with the last trading day.
Judging from the capital inflow, the volume flowing from Shanghai Stock Connect to the MSCI – A-shares Board has shown a remarkable increase; the buy volume has increased to RMB11.27 billion, creating a daily new high in the year and approaching 2.5 times of the average level over the past month (RMB4.4 billion); the increase rate of 146 sample stocks was 91%, with no individual share showing a limit-up and only 7 stocks presenting the increase of over 5%. With regard to the late-day trading performance in the last 5 minutes, the MSCI – A-shares Board was up by 0.13%, boosting Shanghai Composite Index up by 2.94 percentage points (an increase of 0.1%). And the volume of Shanghai Stock Connect buying the MSCI – A-shares Board was RMB2.028 billion, accounting for 18% of the total buy amount of the whole day.
It is learnt that the principal passive funds have completed the position-opening. The SSE has spared no efforts in maintaining the stability of market operation and realized on the whole the smooth transition for A-shares included in the MSCI, which have opened a new engine for A-shares to enter the international stock market.