China seeks to raise inclusion factor for A shares in MSCI indexes to 15 pct

SHANGHAI - The China Securities Regulatory Commission is working on new regulations and tools to help increase the inclusion factor for the yuan-denominated A shares in MSCI indexes from 5 percent to 15 percent as soon as possible, Fang Xinghai, vice chairman of the securities regulator said Thursday.

Fang told the Lujiazui Forum in Shanghai that the reforms range from the stock-closing-price formation mechanism, to stock trading halt and resuming rules, and stock index futures.

Global index compiler MSCI included 226 China large-cap A shares on its MSCI Emerging Markets Index and other global and regional composite indexes as of the close of May 31.

These stocks, at a partial inclusion factor of 2.5 percent, have an aggregate weight of 0.4 percent in the MSCI Emerging Markets Index. In the second step of the inclusion in September, the factor and weighting will increase to 5 percent and 0.79 percent, respectively.

MSCI indexes are tracked by global funds at an estimated amount of $3.7 trillion.

Fang said the capital market shoulders heavy responsibility in promoting quality economic growth. "The pilot China Depositary Receipts (CDRs) program is an innovation of great significance for the capital market," he said.

The securities regulator has also further opened up the capital market as expanding opening-up is vital to its stable and healthy development, he said.

The Shanghai-London stock connect program is expected to be launched within the year.

The regulator has been continuously improving the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect programs, increasing the investment quotas and adding more stocks to the investment list.

It has also facilitated cross-border investment by international investors through Qualified Foreign Institutional Investor (QFII) and the RMB Qualified Foreign Institutional Investor (RQFII) programs, he said.