BlackRock Supports Inclusion of China A-Shares in MSCI Benchmarks

By Gregor Stuart Hunter Features Dow Jones Newswires

BlackRock, the world's biggest asset manager, said for the first time it favors the inclusion of China's domestic shares in MSCI Inc.'s global benchmarks.

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MSCI, which runs indexes tracked by trillions of dollars of global wealth, is consulting the market for the fourth straight year on whether to add Chinese domestic equities, also known as A-shares, to its flagship global benchmarks.

"BlackRock is supportive of China A-share inclusion in global indices," said Sam Kim, head of BlackRock's trading and liquidity strategies group for the Asia Pacific region.

"We have over a decade's experience managing A-share investments for our clients and multiple ways to provide these exposures, including onshore Chinese investment quota and the capacity to use the Shanghai and Shenzhen stock connect programs."

China is the biggest stock market to be absent from MSCI's global benchmarks. At present, only Chinese companies listed overseas are included.

If A-shares are included, fund managers will be compelled to add Chinese domestic shares to their portfolios or risk returns deviating from their benchmarks. Every year since 2014, MSCI has declined -- citing concerns from arbitrary stock suspensions to unclear ownership laws.

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A new consultation launched March 22 reined in the scope of the inclusion sought this year, limiting the number of shares to be included by two-thirds compared to its last consultation. It also noted that Chinese officials have addressed many of the concerns that deterred MSCI in the past.

Asset managers say that although some technical hurdles remain, they are becoming more favorable toward the proposed inclusion.

MSCI declined to comment.

Write to Gregor Stuart Hunter at gregor.hunter@wsj.com

(END) Dow Jones Newswires

April 19, 2017 22:26 ET (02:26 GMT)