HK boosts link between mainland, overseas markets

Financial regulators in Hong Kong hailed Morgan Stanley Capital International's decision to include the A-share index, saying the inclusion will further cement the city's gateway status linking the mainland equity market with overseas stock markets.

Tuesday's decision by MSCI may elicit initial inflows of $17 billion to $18 billion into the domestic equity market, according to MSCI estimates. Capital inflows may reach $340 billion if A-shares are wholly included in the MSCI indices.

"The inclusion of A shares in the MSCI Emerging Markets Index signifies the growing importance of the A-share market to international investors, and will further strengthen Hong Kong's role as the gateway to access the mainland stock market under the existing stock connect programs," said Ashley Alder, chief executive officer of the Securities and Futures Commission, the city's securities market regulator.