GLOBAL index provider MSCI said it would remove Han’s Laser Technology from its China indexes and slash the weighting of Midea Group Co., citing investability issues triggered by foreign ownership ceilings.

MSCI’s statement Thursday came a day after Chinese regulators blocked foreign purchases of shares in Han’s Laser as offshore ownership of the firm neared the 30 percent cap.

MSCI said “in light of potential investability issue for investors,” Han’s Laser will be deleted from the MSCI All Shares Indexes, effective March 11.

In a separate statement, MSCI said it will also adjust the inclusion factor of Midea Group to 0.5, as the current foreign holdings of the stock is close to 28 percent.

MSCI said it would further clarify the treatment of China stocks under the Stock Connect program given the accessibility issues investors face due to foreign ownership restrictions in mainland-listed firms.

Under Chinese rules, combined foreign ownership in a Shanghai or Shenzhen-listed company must not exceed 30 percent, while the ownership cap for an individual overseas investor is 10 percent.

The ownership limit could become a bigger headache for overseas investors buying Chinese stocks, especially small and mid-caps, as China steps up efforts to attract foreign capital to counter the impact of the Sino-U.S. trade war.

MSCI said last week it is quadrupling the weighting of Chinese mainland shares in its global benchmarks later this year, with plans to add Chinese mid-cap stocks in November.

Rival index publishers FTSE Russell and S&P Dow Jones Indices will both start adding yuan-denominated Chinese shares to their global benchmarks this year. (SD-Agencies)