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What next after MSCI inclusion?

Wealth and asset managers give their views on the implications of the MSCI inclusion of A-shares and where they find investment opportunities onshore.
by Fund Selector Asia
European asset manager

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Amundi predicted only $7.5bn in capital inflows into Chinese A-shares initially, into both active and passive products, according to Mo Ji, Hong Kong-based Asia ex-Japan chief economist.

She expected large-cap blue chips to be among the first beneficiaries. For the long-only funds which already have exposure to Chinese A-shares, “either their exposure is big enough, or they will increase the weighting of 50 blue chip stocks, hence we will see another rally in this space”, she said.

“A-shares nowadays are behaving more like H-shares, i.e. the divergence between big blue chips and small- and mid-caps are getting much bigger. As a value investor, one should focus on quality stocks in Chinese A-shares, but not always look at the overall index performance.”

Mo also highlighted the opportunities in the consumer sector, which accounts for 23.5% of the A-shares to be added to the MSCI indices and also the largest sector followed by financials (23%) and industrials (16.1%).

As China has a big consumption base of 300m urban citizens, “the consumer sector still has a long way to go”, she concluded.

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