MSCI signals investors have confidence in Chinese market

Global stock indexes provider MSCI's announcement on Tuesday that it will include 222 large Shanghai and Shenzhen listed companies into its widely followed Emerging Markets Index is a welcome move that caters to the needs of international investors and reflects their rising confidence in the Chinese economy.

Given that MSCI has more than $10 trillion worth of active and passive assets benchmarked against it, with $2 trillion tracking the Emerging Markets Index alone, the inclusion will surely buoy up the bearish Chinese domestic market in the long run.

This has not come easy, as MSCI has excluded Chinese mainland shares for three years in a row, citing China's restrictions on market access and on capital flows in and out of the country.