MSCI inclusion a boon for A-share market

US index provider MSCI's decision on Tuesday to include the Chinese mainland's stocks in its widely tracked MSCI Emerging Markets Index and All Country World Index in June 2018 could create a windfall of tens of billions of US dollars from asset managers, pension funds and insurers for the mainland's equity markets over the next decade, according to analysts. The MSCI's decision will also help China open up its capital market, though the road to the internationalization of China's A-share market is still not as smooth.

"This decision has broad support from international institutional investors with whom MSCI consulted, primarily as a result of the positive impact on the accessibility of China's A-share market of both the Stock Connect program and the loosening by the local Chinese stock exchanges of pre-approval requirements that can restrict the creation of index-linked investment vehicles globally," the MSCI said in a statement.

The inclusion of Chinese shares in the MSCI index is not simply an addition of numbers; it will have "multiple effects" on the global market.