Re-weighting of indexes to affect capital flows

Major stock and bond index providers have started, or have announced that they intend, to increase the weighting of China's securities in their respective benchmark indexes over the course of 2019-20.

Global index provider MSCI Inc. announced in February that China's coverage in the MSCI Emerging Market Index will increase from its coverage of 235 large-capitalization A-shares to 253 large-and 168 mid-capitalization stocks. On a pro forma basis, A-shares will constitute 3.3 percent - a significant increase from the current 0.7 percent - of the MSCI-EM Index when the process is completed in November.

The FTSE Russell, the first international index provider of the Chinese mainland's benchmarks 20 years ago, has elevated China's A-shares to emerging market status and started adding them to the FTSEEM Index from June 24, 2019. Upon full implementation of phase 1 by March 2020, the A-shares will make up 5.7 percent of the index.