Some 234 companies in the world’s second-biggest stock market just got their ticket into MSCI Inc.’s global equity indexes.
MSCI, the world’s top stock-index compiler, unveiled Monday the final list of Chinese shares that will be included in its global benchmarks at the close of May 31. That means investors will need to buy yuan-denominated stocks for the first time if they want to closely track the benchmark gauges, opening China’s huge equity landscape — with its big swings and unique idiosyncrasies — to the pension and mutual funds that track MSCI’s gauges.
Still, don’t expect much impact at first. Only a tiny slice of the stocks’ market capitalization will be added, and it will join in two steps: the first after the close on May 31 and the second on Aug. 31, effective Sept. 3. That means A shares will initially represent about 0.39 percent of the weighting on the MSCI Emerging Markets Index next month before increasing.
What will they be taking on? Here are some of the more notable inclusions:
FOOD AND BOOZE
Kweichow Moutai Co. , China’s biggest liquor maker.
Pig breeder Muyuan Foodstuff Co., seasonings maker Foshan Haitian Flavouring & Food Co. and cash-rich dairy producer Inner Mongolia Yili Industrial Group Co. also to be included.
CHINESE TECH:
China has seen some hefty tech-stock gains over the past year, as the government pushes to re-orient its economy toward higher-end manufacturing. Iflytek Co., a developer of voice recognition software, has almost doubled in the past year.
The country’s embrace of digital surveillance — it will add 400 million surveillance cameras through 2020, according to Morgan Stanley — has also boosted fellow MSCI inductees Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co.
ELECTRIC CARS:
The country is targeting a seven-fold increase in new-energy car sales, fueling equity gains in suppliers of battery ingredients like cobalt and lithium. Zhejiang Huayou Cobalt Co. and Jiangxi Ganfeng Lithium Co. — are two related stocks being added.
PRICY PICKS:
Mainland Chinese stocks have long traded at a premium to those in Hong Kong, and the MSCI list includes some pricey names. Iflytek is valued at 174 times reported earnings, while Jinduicheng Molybdenum Co., which mines and processes an obscure metal used to make steel, trades at 133 times reported earnings.
Source: Bloomberg
