Xinhua Finance and global index provider FTSE Group (FTSE) have launched the FTSE Watch List Series, a series of indicative indices including China “A” shares which are expected to eventually enter global indices.
The series is designed to help international investors prepare for significant shifts in global investment allocations that may result when China “A” shares become eligible for inclusion in global indices, according to a press release from Xinhua.
The new indices aim to assess the influence of turnover, investment flows and country weightings that the addition of China “A” shares to global equities will have on international portfolios. They provide an interim view of current market conditions in Asia Pacific portfolios, if China “A” shares were already eligible for inclusion.
The progressive opening of China’s domestic A share markets to foreign investors means global asset managers want to prepare for the anticipated impact of China A shares being added to global portfolios.
“The Watch List will allow investors to precisely assess the impact that the addition of China “A” shares to global equities will have on international portfolios,” Xinhua Finance CEO Fredy Bush said.
China has recently started to allow foreign investors to buy domestic shares denominated in the local currency, known as “A” shares. Investments are made through the Qualified Foreign Institutional Investor (QFII) scheme.
Chinese regulators have indicated their intention to gradually relax restrictions on foreign investors in the “A” share market, and the Watch List Series will help investors to prepare for the inclusion of China “A” shares in the FTSE Global Equity Index Series.