Smartphone giant Xiaomi, Tencent Music among a dozen stocks to be added to MSCI China Index
- Their inclusion is likely to benefit them in the long term because they may attract global funds that track such indexes, said analysts
Smartphone giant Xiaomi and online video platform Iqiyi are among a dozen listed companies to be added to MSCI’s benchmark Chinese equities gauge, the global index compiler announced on Monday.
The inclusion of the stocks in the MSCI China Index at the end of February is likely to benefit them in the long term because they may attract global funds that track such indexes, said analysts. MSCI claims to serve “99 of the top 100 largest money managers”.
“Those funds will not buy and sell frequently but [they will] hold the stock, so the overall supply in the market will reduce and it will help long-term stability for the share price. I believe it will help their long-term share price go up,” said Castor Pang Wai-sun, head of research for Core Pacific-Yamaichi.
Twelve securities will be added to the index, and none deleted, MSCI Global Standard Indexes said in a note.
A total of 17 components will be added across the world to MSCI’s gauges, with the majority in China. Taiwan and Europe will each see one stock added to their benchmark indexes while in the US, three will be added and one removed.
The MSCI China Index currently includes 459 constituents, representing large and mid-cap stocks in the world’s second largest economy, and accounting for roughly 85 per cent of its total equities.