English English

By Xie Fang

The internationalization of China's A-share market got another boost Thursday as the world-renowned S&P Dow Jones Indices announced that it would include part of A-share stocks in its index system, the Shanghai Securities Journal reported.

In its 2018 Country Classification Consultation Results released Thursday, the New York-based equity index compiler said that it had realized the "importance of China in global investment portfolio and the evolution of its markets over the last several years."

The company singled out "the increased market accessibility to foreign investors through the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect programs," announcing that it will add eligible A-share stocks "that are accessible via the Shanghai-Hong Kong Stock Northbound Connect or Shenzhen-Hong Kong Stock Northbound Connect facilities" to its global benchmark Indices.

Six index families, including, among others, the S&P Global BMI and the Dow Jones Global Index, which are under the company's Emerging Market classification, will be involved in the inclusion of the A-share stocks which is scheduled to take effect prior to the market open on Sept. 23, 2019, Eastern U.S. time.

According to the S&P Dow Jones Indices, the weight factor it plans to assign to the involved A-share stocks equals to 25 percent of each company's "investable" market capitalization.

Before the formal inclusion on Sept. 23 next year, the company will issue the list of the targeted A-share stocks on Sept. 6, 2019, Eastern U.S. time according to its timetable.

S&P Dow Jones Indices' announcement heralds another significant moment for the A-share market as it seeks to draw closer to global investors.

On June 1, the world-leading equity index giant Morgan Stanley Capital International (MSCI) formally included some 200 A-share stocks into its emerging markets index, setting the first milestone for the internationalization of the Chinese stock market.

The MSCI doubled the weight factor assigned to the A-share stocks three months later on Sept. 1, which was less than a month before the British stock index compiler FTSE Russell announced its plan to envelop the A-share market into its flagship equity index.

Meanwhile, the Chinese government has also taken action to welcome overseas equity investments by loosening the restrictions on the opening of securities accounts by foreign investors this Sept.