LSE index provider to promote China's A-shares

The London Stock Exchange's index provider, FTSE Russell, is promoting its A-share-included index to investors.

The company is looking to ride the momentum of the recent opening up of China's stock and bond markets and renminbi internationalization.

These Chinese capital market liberalization measures have increased international investors' appetites for Chinese assets, and FTSE Russell is making the most of this market impetus.

Sudir Raju, the company's managing director of exchange trade products, said at a news briefing on Monday that Western institutional investors and sovereign wealth funds are increasingly buying its index that includes A-shares.

Launched last year, this index has a 5.9 percent weighting in A-shares. It differs from FTSE Russell's main emerging markets index, which only includes weightings for other minor types of Chinese shares. A-shares are far more popular and common in China.

Overall interest in the Chinese stock market has grown recently because of the renminbi's inclusion in the International Monetary Fund's basket of special drawing rights currencies from October.

This has prompted global investors to increase their holdings of renminbi-denominated products, such as stocks and bonds.

The FTSE index tracks underlying Chinese stocks,meaning it gives Western investors opportunities to buy into China's equity market.Currently they have only limited access due to the country's capital flow controls.

Raju said it is"not a question of if, but a question of when" for Chinese regulators to remove barriers for international investors in the Chinese stock market.

His team has created another index with a 26.9 percent weighting for A-shares to show the true significance and market demand for such shares in a global emerging market sportfolio.

This index is not yet available for purchase.

FTSE Russell's efforts to help channel funds into the Chinese stock market come as banks and securities companies are also promoting the same opportunities for their clients, one example being Citibank.