CHINA’S stocks rose the most in two weeks yesterday, reversing from early losses as investors shrugged off MSCI’s decision not to add mainland shares to one of its key benchmark indexes.

    Traders said investors had already been bracing for a “no” decision, as reflected by Monday’s market tumble of more than 3 percent, with some bargain hunting in the process.

    The blue-chip CSI300 index rose 1.3 percent to 3,116.37, while the Shanghai Composite Index gained 1.6 percent to 2,887.21 points.

    They opened roughly 1 percent lower as some investors who had clung on to hopes of MSCI inclusion unwound their bets.

    With the MSCI decision now in the rear mirror, investors are focusing again on China’s struggling economy and the potential fallout for global growth and financial markets if Britain votes to leave the European Union next week. Europe is one of China’s biggest export markets.

    “Regarding MSCI, most retail investors in China don’t really care. And for institutions, their expectations of an inclusion have been greatly reduced since the market crisis last year,” said Charles Wang, chairman of Shenzhen-based Appleridge Capital Management Co.

    “Failing to be included this time is not necessarily a bad thing. It can prod the government to improve market mechanisms and push reforms.”

    Shen Weizheng, a fund manager at Shanghai-based Ivy Capital, said that even if A shares are included, it would still just be a symbolic event. The real impact would be limited.

    “My biggest concern now is China’s economy. After strong stimulus previously, the government seems to have suddenly tightened the liquidity tap. I’m afraid the economy will loose steam.”

    The Shenzhen Composite Index surged 3.1 percent and the ChiNext gauge of small company shares rallied 3.4 percent, bolstered by speculation authorities will announce a start date to the long-delayed exchange link with Hong Kong.

    “There are expectations that the pace of the Shenzhen link will be accelerated to offset the negative impact of the MSCI decision and to display China’s commitment to further opening up its capital markets,” said Wang Chen, a partner with Xufunds Investment Management Co. in Shanghai. (SD-Agencies)