By Yin Lei
Northbound investors are increasing their stakes in A-shares ahead of their inclusion into the MSCI Emerging Market Index, as reported by the Shanghai Securities News on Thursday.
In May, net capital inflows into the A-share market, via its two stock-connect programs with Hong Kong, reached a record high of over RMB 45 billion. During this month’s trading, only five days witnessed net capital outflows.
On May 14, just before the list of new constitute stocks for the above MSCI index was to be unveiled, the A-shares registered an influx of RMB 5.686 billion in a single day.
These constitute stocks had been particularly favored by northbound investors, making up nearly 40 percent of their top 100 targets.
They covered most of the A-share market leaders in the field of finance, consumption, medicine, and computer manufacturing, and witnessed a surge in the stakes held by northbound investors.
In May, these investors boosted their stakes by over two percent in four companies trading at the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
As the consumption, technology, and industry blocs sustain a steady growth in the next several years, they will very likely become the target of institutional investors, which prefer long-term stakes, as believed by Ma Lei, a fund manager of Fidelity International.
To serve these overseas investors, many foreign agencies are making active preparations, such as JPMorgan and Goldman Sachs, which are working to expand their research to cover more A-share firms.
As the MSCI put new constitutes into its Emerging Market Index, it also acted to scrap some firms from its other indexes.
On Wednesday night, it announced that shares of five Chinese firms would be suspended from the inclusion into the MSCI China Index. These five shares would also be excluded from the MSCI China A Inclusion and MSCI China A Large Cap. These adjustments were set to take effect on June 1.
As of the date of the above announcement, trading for these five companies’ shares had remained suspended.
