S&P Denies China A-Shares Global Index Promotion
S&P Dow Jones Indices is the latest major index provider to deny China’s A-shares stocks a coveted index promotion. In an announcement made earlier this week, the index provider
decided not to include China A-Shares in any S&P Dow Jones Indices’ global benchmarks at, including the S&P Global BMI, S&P/IFCI Composite, Dow Jones Global Index, and Dow Jones Global Total Stock Market Index.
“Despite significant improvements in accessibility to the A-share market, survey participants highlighted a variety of remaining investability constraints. The issues included the varying and unpredictable quota requirements for systems of the QFII and RQFII, concerns with currency repatriation, and a lack of clarity on the structure of the capital gains tax,” said S&P Dow Jones Indices in a statement.
The index provider said it will continue to monitor China’s regulatory reform efforts.
Last month, MSCI (MSCI) decided against elevating Chinese A-shares to the MSCI Emerging Markets Index. The index provider will keep A-shares on the review list for a possible promotion to the emerging markets index in 2015.
“This decision is based on feedback highlighting remaining investability constraints linked to the QFII and RQFII quota systems received from international institutional investors in a consultation launched in March 2014 on a potential roadmap for inclusion of China A-shares in the MSCI China and MSCI Emerging Markets Indexes,” said MSCI in a statement.
That has not derailed A-shares ETFs from posting solid gains. Since the MSCI announcement, the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) is up 2.5% while the KraneShares Bosera MSCI China ETF (KBA) is up 2.1%. [A-Shares ETFs as Value Plays]
The db X-trackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS) debuted on May 21, just a few weeks before MSCI announcement. ASHS has surged 9% since coming to market. [New ETF for China Small-Caps]
Emerging markets ETFs that benchmark to S&P indices include the SPDR S&P China ETF (GXC) , the SPDR S&P Emerging Asia Pacific ETF (GMF) and the SPDR S&P Emerging Markets ETF (GMM) .
db X-trackers Harvest CSI 300 China A-Shares Fund
ETF Trends editorial team contributed to this post.
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