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MSCI Adds Chinese-Listed Shares To Emerging Markets Index

This article is more than 6 years old.

MSCI, the world’s largest indexing firm, had good news for Beijing on Tuesday afternoon: Chinese-listed shares have what it takes to be included in global indexes like accessibility, liquidity, and transparent ownership.

That's a big reversal from last year, when MSCI rejected China's bid to join the index.

While some of these problems are common to emerging market economies, they have been made worse in 2016 by Beijing’s meddling with the functioning of its equity markets. Like the trade suspension last summer. And the circuit breakers last January, which have sent major Chinese indexes sharply lower over the same period.

Index/ETF 12-month Performance 10-year Performance
iShares China Large-Cap (FXI) 17.15% 3.43%
iShares MSCI Emerging Markets (EEM) 17.24 2.09
SPDR S&P 500 ETF (SPY) 17.08 7.51

Source: E*Trade.com 6/20/17

MSCI’s decision means that Chinese shares will trade in global exchanges. That’s certainly a big victory for Beijing, as it tries to rebuild confidence among domestic and foreign investors.

I spite of the rapid economic growth that has turned the Chinese economy into the world’s second largest economy, China remains a regional, rather than a global economic player, as discussed in a previous piece here.