CHINA has boosted the chance of getting its domestic stocks included in MSCI Inc.’s main benchmarks after approving a program that will allow investors in Hong Kong to trade equities listed on the Shenzhen Stock Exchange.

    By further opening its US$6.5 trillion domestic share market to foreign traders, China is addressing limitations to mainland trading flagged by MSCI when it rejected the stocks for a third year in June. Global investors praised China’s decision Tuesday.

    “Removing barriers to foreign investment makes sense as it should hasten inclusion of China’s market in MSCI global indexes,” said Steven Einhorn, vice chairman at New York-based Omega Advisors, the US$5.3 billion hedge fund founded by Leon Cooperman. “It internationalizes China’s market,” he said.

    The long-delayed link, which had been expected for more than a year following a similar program between Shanghai and Hong Kong in 2014, may start in four months. The China Securities Regulatory Commission also lifted restrictions on asset flows, saying it won’t impose an aggregate quota for the Shenzhen link, and that it will remove the existing cap on the Shanghai program. There will be still daily limits on net purchases for both programs.

    Tuesday’s decision “speaks to the fact that Chinese regulators are focusing on opening the capital market in general, whether it’s equity or debt markets,” said John Malloy, who oversees US$2 billion as co-head of emerging and frontier markets at RWC Partners in Miami. “That’s the bigger story.” (SD-Agencies)