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Interview: MSCI to include China A-shares in its benchmarks within 2015: expert

Xinhua, June 14, 2015 Adjust font size:

MSCI Inc. is going to add China A-Shares to its MSCI Emerging Markets Index quicker than many anticipate, which could happen in 2015 toward the end of the year, a U.S. financial expert told Xinhua.

"First and foremost, MSCI is going to include onshore China equities, I think they were very clear in explaining," said Brendan Ahern, managing director at KraneShares, a New York-based exchange-traded fund firm.

MSCI announced that it expected to include China A-shares in its MSCI Emerging Markets Index after a few important remaining issues related to market accessibility -- quotas for large investors, capital mobility and details of beneficial ownership -- have been resolved.

"I don't think any of them is insurmountable as these issues can be in conjunction with the China Securities Regulatory Commission (SCRC), and I think they could be resolved very quickly," Brendan told Xinhua.

According to MSCI's announcement, it will form a working group with CSRC to address the concerns. Once the issues were resolved, the inclusion may be declared outside the regular schedule of its annual Market Classification Review.

"It is difficult to approve the inclusion without Shengzhen-Hongkong connection, not necessarily being launched but at least being announced."

"I think the CSRC, SFC in Hong Kong, Shanghai and Hong Kong stock exchanges had done a very good job. They have been very proactive in listening feedback from the market place on what are the things they need to do. If they continue with this ongoing effort in talking to foreign asset managers, they are able to further identify issues as well as they will come up with very timely solutions," he added.

China A-share market, the world's second-largest market by value, already has potential that is hard to ignore. Last month, an MSCI competitor, the FTSE Group, included China's A-shares in two new transitional indexes for emerging markets, and last week the Vanguard Group, the largest U.S. provider of mutual funds, added the A-shares to its emerging-markets fund. Endi