CHINA’S blue-chip index closed at its highest in more than a year yesterday, boosted by news of U.S. index provider MSCI saying it could substantially raise the future weighting of Shanghai and Shenzhen-listed A shares in its emerging markets benchmark.

The Shanghai SE 50 Index, an index tracking the 50 most representative blue-chips on the Shanghai Stock Exchange, advanced 0.6 percent to an 18-month high. The index has gained 11.2 percent in 2017, versus a gain of 2.6 percent in the benchmark the Shanghai Composite Index.

The blue-chip CSI300 index rose 1.3 percent to 3,668.09 points, while the Shanghai Composite Index ticked up 0.9 percent to 3,185.44 points.

Shanghai Securities News reported yesterday that MSCI CEO Henry Fernandez saying MSCI could raise the future weighting of A shares in its Emerging Markets Index, potentially adding 195 mid-sized stocks.

MSCI’s decision to add 222 China-listed large-cap stocks to its Emerging Markets Index (EMI), tracked by around US$1.6 trillion, has already fuelled a blue-chip buying spree in shares listed on the Shanghai and Shenzhen stock exchanges.

“For now, we are optimistic about the A share market, which has been picking up recently, aided by better policy and liquidity conditions,” Haitong Securities wrote in a report.

Listed companies in the A share market are also expected to record rapid profit growth in the second quarter and for the full year, the brokerage added.

Sectors rallied across the board. The top performing real estate sector jumped 4.6 percent to a near seven-month high, led by bellwether China Vanke, which soared 10 percent for the second straight session.

The market showed scant reaction to news that China imposed a penalty of nearly 700 million yuan (US$102.30 million) on a Russian-controlled high-frequency trading firm Friday for futures market manipulation.

The Shanghai No. 1 Intermediate People’s Court also issued a penalty to two executives of Yishidun International Trading Co. Yishidun, based in China’s eastern city of Zhangjiagang and controlled by Russian nationals Georgy Zarya and Anton Murashov, pocketed illegal gains worth 389 million yuan by frequently trading China’s index futures between June 1 and July 6, 2015, the Shanghai court said.

According to the verdict, Yishidun would be fined 300 million yuan, and its illegal gains would also be confiscated. (SD-Agencies)