MSCI's reweighting to see surge in foreign capital

Fang Xinghai, deputy head of China's securities regulator, predicted at a forum in January that the country's stock market will see an inflow of foreign capital totaling about 600 billion yuan ($88.76 billion) this year, doubling the inflow of 300 billion yuan recorded last year.

Fang attributed the rosy prospects to global investors' confidence in the Chinese economy in the long term and more access to domestic capital market thanks to Stock Connects and the inclusion of A-shares into global indices.

Morgan Stanley also projected a record-breaking foreign capital inflow into A-share market, saying a total range between $70 billion and $125 billion from overseas investment will go to the market this year, well above the average level of $35 billion in the past three years.

Rival index publisher FTSE Russell and S&P Dow Jones Indices will both start to include Chinese shares to their global benchmarks this year.

Still, MSCI looks forward to promoting developments in issues, including permitting the listing of index futures and other derivatives on onshore and offshore exchanges to help address international institutional investors' growing needs for further risk management tools, as well as making further improvements in the settlement cycle, trading holidays and omnibus account structures, ahead of any future weight increases of China A-shares in the MSCI Indexes.

The benchmark Shanghai Composite Index rose 0.14 percent to 2,945.05 points in the morning session on Friday, while the Shenzhen Component Index landed in at 9,036.36 points, up 0.05 percent, and the ChiNext Index, China's NASDAQ-style board of growth enterprises, jumped 0.57 percent to 1,544.37 points.