China MSCI debut is about to put new stocks in your pension

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Stock price movements are seen on a screen at a securities company in Beijing on March 23, 2018.Nicolas Asfouri/AFP files

China’s stock market is about to go global like never before.

On June 1, MSCI Inc. will add distiller Kweichow Moutai Co., brokerage Guosen Securities Co. and more than 200 other locally listed Chinese companies to benchmark equity gauges that guide the investment of US$12 trillion. The New York-based index compiler will publish its final selection of so-called A shares on Monday, putting many of them on the buy lists of international retirement plans, endowments and exchange-traded funds for the first time.

It’s a major symbolic win for China, which for years has craved greater global recognition of its financial markets and a bigger international role for its currency. While foreign investors still have concerns about everything from China’s debt risks to state intervention and capital controls, many are keen to increase their exposure to a US$13 trillion economy that’s growing twice as fast as the U.S.

“Overall the addition of China A shares is symbolic of China’s increased liberalization of financial markets and represents a new era where China is a true player in global markets,” said Eleanor Creagh, Sydney-based market strategist for Saxo Capital Markets.

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