GLOBAL stock index provider MSCI said yesterday it would be flexible on its review schedule for whether to include locally-listed Chinese A shares in its key emerging markets benchmark index.

    MSCI’s review on if and when to include Chinese mainland shares in the Emerging Markets Index, which is tracked by US$1.7 trillion in funds, is being closely watched by investors since it may lead to billions of dollars flowing into China’s markets.

    Rival index provider FTSE Russell said last week it will launch two transitional indices that include China A shares — a staggered approach that will bring the shares into its emerging markets benchmark in two to three years.

    MSCI officially has a June-to-June schedule for its market classification review and China has been lobbying hard for mainland-listed stocks to be included in its emerging market benchmark this year. Expectations that they could make the cut have grown after the Hong Kong-Shanghai stock connect program helped open up China’s stock market.

    But some leading global fund managers feel China must make bolder reforms before mainland-listed shares can be included in key indices.

    The stock connect program is not due to add Shenzhen shares, which represent a large chunk of China’s equity market, until later this year leading to speculation MSCI may review A share inclusion again in the autumn if it decides not to push ahead this month.

    Speaking during a press briefing in Hong Kong yesterday, Chin Ping Chia, head of research for Asia Pacific at MSCI, said the stock connect program, as it currently stands, “cannot completely fulfill the needs for benchmark inclusion as a standalone channel.”

    But he said the index provider would be as flexible as possible on the review schedule, adding it was not rigidly bound to the year-to-year cycle.

    He did not give any indication of MSCI’s decision on a formal announcement expected June 9.

    MSCI began consulting with the market about the potential inclusion of China A shares in March 2014 but opted not to include them in its June review last year. (SD-Agencies)