As Forbes reports, MSCI rejected including the A-shares market in the MSCI EM last year. There are no guarantees that it will happen in June, but that it will happen is a certainty.
Steve Sjugggerud, the chief strategist at Baltimore-based Stansberry Research, says that the only road block will be Shenzhen. That’s because the exchange is not yet part of the so-called “thru-train”, which already links Shanghai and Hong Kong exchanges, providing quota-based north and south-bound trade between A-shares and H-shares for the first time.
The ETF and mutual fund money tracking the MSCI EM will flow slowly into China. There will be billions of dollars getting wired into China and Hong Kong-based banks over the next few years because of this stock market maturation.
“Funds still have to allocate to the benchmark if they’re tracking the index, regardless of how they feel about China’s stock market,” says Sjuggerud.