MSCI holding out prospect of China’s ‘A’ share inclusion one day excites Templeton’s Mark Mobius

11th July 2013

While the headline writers concentrating on Greece’s ‘demotion’ to emerging market status, Mark Mobius, executive chairman of the Templeton emerging markets group says the big news may be MSCI’s suggestion that China’s domestic ‘A’ share market will be included eventually.

In a note issued this week, Mobius says: “While Greece’s reclassification made headlines, perhaps the most striking MSCI announcement did not involve an actual change, but one that may be on the horizon. China’s domestic “A” share market probably won’t become part of an MSCI index any time soon; however, the idea that it might become eligible at some point is potentially of tremendous significance given the very large size of the market compared to the internationally traded “B” and “H” share markets.

Mobius points out that MSCI’s commentary on the subject emphasized huge obstacles remaining to the “A” share market joining the MSCI index family, notably the limitations of the “qualified foreign investor” quota system as a means of providing access and a level playing field for foreign investors, ongoing restrictions on foreign exchange trading and uncertainty about taxation.

“Nevertheless, as investors we should be aware of, and excited by, the prospect that a vast and dynamic market may eventually become more available,” he says.

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