Postponing The Impact Of A Share On The MSCI Emerging Market Index

This Wednesday, Ming Sheng announced that it will be postponed again

Included in the MSCI emerging market index.

It should be said that this is a bad news, but the A share market's response is not pessimistic. On Wednesday, the A stock index is all close to the Yang line.

Tempering the past has tempered a normal mind.

MSCI announced the results of the 2016 global market classification review, which delayed the incorporation of China's A shares into the MSCI emerging market index.

MSCI affirmed that the Chinese authorities have made a series of notable improvements to the access system of China's A share market in order to meet the needs of international investors, and indicated that if the A share market entry status had significant positive progress before June 2017, the possibility of inclusion in advance could not be excluded.

The issue of real rights and interests has been satisfactorily resolved, but the following questions remain: QFII's monthly capital redemption does not exceed the limit of 20% of the net assets of the previous year; the Chinese stock exchange has not yet resolved the pre-approval restrictions on the financial products involving A shares; the QFII quota allocation, the progress of capital flow restrictions, and the new rules for the suspension of the exchange still need time to observe.

In June 6th, a commentary pointed out that the parties concerned should take the A share market into the MSCI.

We believe that the response of MSCI also reflects the achievements and challenges of China's capital market reform. We can see that the continuous reform of the system has a great positive effect. This idea will still be firmly implemented in 16/17.

At the same time,

The significance of advancing as soon as possible is the focus of follow-up observation.

It shows that China's Shanghai and Shenzhen have the conditions to open to overseas markets through different channels, and speed up their integration with the international market at different times.

As early as 2013, the China Securities Regulatory Commission (CSRC) communicated with MSCI, hoping to bring China's A shares into the index range. In June 2013, A shares were first selected as "the list of potential market upgrading observations".

In the 2014 and 2015 market segmentation deliberations, MSCI decided not to include A shares in the global benchmark index.

However, after the third effort, today, A shares are still postponed to join MSCI, and continue to retain the "do not rule out the possibility of publishing A shares ahead of the regular cycle of annual market classification review".

Our comments are as follows:

1, MSCI expressed satisfaction with the clarification of the Commission's actual income right in May, which means that a firm change of substance can solve the problem in a short time.

2, MSCI said that China had seen the new regulation of QFII in February and the efforts of the SFC in May. It was speculated that MSCI had had an exchange of views before the June meeting, and had exchanged feedback from the current market participants. However, the problem of monthly redemption restrictions and cycles is still difficult to reach agreement, reflecting that in the short term, it is still prudent to manage the capital account liberalization under the pressure of RMB exchange rate and capital flight, or give priority to maintaining the relevant demands of internal stability.

3, the new rules for suspension and the restrictions on pre approval of financial products, the impact of MSCI on the latter is more important, and concerns may continue to affect the coherence of pactions and the enforcement of related hedging behaviors.

4, we anticipate that even if we do not join, there will be special appeasement phrases.

For example, MSCI does retain the possibility of being included in A shares ahead of next year's regular meetings. It also indicates that China's A shares will remain on the audit list of emerging markets in 2017. Compared with the list of South Korea, which is put forward in 2017, we can see that the authorities' continuous action to reform the system is of great positive effect, and this idea will not stop at 16/17 in June 2017.

Just as we commented on 2015 when we commented on FTSE's decision to include A shares in the index range, any progress will be regarded as RMB internationalization and China.

The important step of opening up is the beneficial result that we actively promote mutual recognition and expansion of QFII, QDII and system amendments.

Don't take the MSCI index too seriously.

In June 15th, MSCI announced that it would delay the incorporation of China A shares into the MSCI emerging market index. Meanwhile, A shares would continue to be included in the 2017 list of emerging market indices.

This also means that the third time that A shares have been included in the MSCI index suffered setbacks again.

Although regulators have said that China is already the second largest economy in the world, the international influence of the A share market is gradually improving. Any international index without China's A shares is incomplete, but it can not change the fate of being excluded from the MSCI index.

Previously, the market was full of expectations for the A share to be included in the MSCI index. In the current market environment, there are many market participants who believe that the inclusion of MSCI index will affect the volatility of the stock market.

But on the day of June 15th, the Shanghai and Shenzhen stock markets went up all the way after the low opening, and all of them were closed in a middle line.

Obviously, the MSCI index has not been included in the A index. It is just a "meaning" in the intraday market, and the MSCI index is not taken seriously.

In fact, MSCI related index has long been included in China's A shares, such as MSCI China Index, MSCI China A share index and so on.

In addition to the MSCI emerging market index, the A shares will also include the MSCI global index, which is mainly targeted at international agencies.

If the United States began to explore the A share index into the MSCI index in 2013, this year is the fourth year that A shares have been linked to the MSCI index.

During the period, the CSRC was very supportive of the A share's inclusion in the MSCI index.

For example, at a regular press conference in March 20th last year, the press spokesman said that it would actively resolve the technical details related to the entry and index of international institutional investors and provide more convenience for international investors to invest in the A share market. At the same time, it will continue to actively communicate with international institutions and promote A shares into the international benchmark index.

In June 12th this year, "Lujiazui (600663) forum", Qi Bin, director of the International Cooperation Department of the securities and Futures Commission, was rare. "China's A share market is the second largest market in the world, and is also the largest emerging capital market and the fastest growing market. In theory, the global index of A shares is incomplete."

The inclusion of the MSCI index will have different effects on A shares.

In the short term, it can introduce foreign capital into A shares.

It is estimated that, according to international practice, the initial proportion of A shares is 5%, corresponding to the MSCI emerging market index, the weight is 1.1%, the new capital is about 100 billion yuan, and after all the A shares are weighted, the corresponding funds are about 1 trillion and 600 billion yuan.

Therefore, the introduction of A shares is the most direct embodiment of the MSCI index.

On the other hand, the inclusion of MSCI index has positive significance for promoting the standardization of A shares.

After last year's stock market crash, the listed companies in Shanghai and Shenzhen two cities frequent frequent suspension and delayed resumption. In order to be able to incorporate the MSCI index, the Shanghai and Shenzhen Stock Exchange issued guidelines for stopping the resumption of cards in the near future, stipulate that in principle, the suspension time can not exceed 5 months, and the exchange can suspend the approval of the suspension application under extreme circumstances.

In addition, the A share in the MSCI index will also help the A share market go out and enhance the influence and discourse power of China's capital market in the global capital market.

At the same time, it will also accelerate the process of RMB internationalization.

However, last year, the A share was not included in the MSCI index. Ming Sheng company raised three problems, including the allocation of the quota, capital flow restriction and ownership of the investment income. After a year's efforts to solve these problems, it raised the two major problems of the suspension of the listed companies arbitrarily and the anti competition clause in April.

Obviously, MSCI's appetite is bigger and bigger, and it also has the trend of "taking advantage of everything". Undoubtedly, it is for the benefit of two words.

I believe that for the price of MSCI, we must stick to our principles and bottom line. We must not lose our self in order to be included in the MSCI index and harm our own interests.

In fact, even if A shares are not included in the MSCI index, the channels for A shares to introduce foreign capital are still smooth.

Moreover, as long as we are making progress in the direction of marketization and rule of law, what can we do if we can create a stable and healthy capital market and not be included in the MSCI index?

We can not understand the "normal mind" narrowly.

In June 15th, the market share of A shares in MSCI was finally answered.

Ming Sheng has rejected the A shares for the third time outside the MSCI gate.

However, for this bad news, the A share market has made an unusual response.

On the same day, the Shanghai composite index opened at a low level and pulled out a solid line of up to 72 points.

In the face of bad luck, A shares are not surprised, even pulling out of Changyang. No wonder some people want to ask: does the A share market have the common sense of the financial times?

We must not be too narrow minded to understand this "normal mind" problem.

In terms of the trend of the A-share market, it is hard to say that there is a common sense that A shares should be included in the MSCI issue.

From the perspective of the history of the A share market, the stock market has not gone up and down in the case of bad profits, and in the case of favorable introduction, the stock market has not risen or fallen, which is not common in the A share market.

Moreover, whether A shares can be incorporated into MSCI is relatively limited in terms of its short-term impact on the A share market.

What's more, the market has already had psychological expectations for the A shares can not be included in the MSCI. The A share market has made an early response on Monday (June 13th), and the Shanghai Composite Index fell 94 points on that day.

Therefore, in June 15th, when Ming Cheng formally postponed bringing A shares into the MSCI emerging market index, A shares turned out to be bad.

Therefore, the rise of A shares is also a matter of reason. It is also difficult to relate A shares to the common sense.

Maybe we need to understand what the financial times mean in this case. When the A share market is full of expectations for A shares, the A share market even surged 94 points in May 31st, and many people are advocating that A shares will be included in MSCI, which will bring a rise to A shares.

Against this background, the financial times of the central bank issued a comment in June 6th on the question of whether A shares should be included in MSCI with a common sense, which gave the market a preventive measure.

What is the usual mind of the financial times? It means that "promoting the healthy development of the stock market is fundamental to success or failure". If the MSCI is successfully incorporated into the A, it is not necessary for the parties to cheer. This shows that the phased results of the marketization and internationalization of the A share market have been further recognized. We should regard it as the driving force for further development. If this MSCI refuses to A shares again, we need not be impatient. This shows that the institutional construction of the A share market is still in urgent need of improvement.

From the point of view of the A share's response to the rejection of the MSCI index, the domestic market is not calm, and it is far from reflecting its "normal mind".

Although the A share market seems to be very calm, it seems that A shares have not been included in the MSCI index.

But in the A share market, many public opinions are unbalanced.

For example, in the SFC's response to reporters' questions, the SFC still shows a "big A share market" style, claiming that whether A shares are included in MSCI is the commercial decision of Ming Sheng, and any international index without China's A shares is incomplete.

The Xinhua News Agency commented that Ming Sheng's three rejection of A shares lacks foresight, claiming that A shares should be included in MSCI sooner rather than later.

These public opinions do not face up to the deficiencies of the A share market, and are far from the expression of "common heart".

In fact, for the A share market, it is not necessary for us to take A shares into the MSCI business too seriously. Just as "common heart" says, no matter success or failure, it is fundamental to promote the healthy development of the stock market.

In fact, as long as our stock market is developing healthfully, joining MSCI is a piece of cake.

In other words, if we were lucky enough to join the MSCI, in addition to the face of the A share market, the A share market would not be a market with a lot of holes. Would it not be a money market, or would it be a vicious market that would harm the interests of investors?