Saudi Arabia, China A-shares to see boost in MSCI emerging market index

MSCI Inc. is updating certain key indexes, with changes taking effect when the market closes on Tuesday.

Stemming from MSCI’s most recent quarterly index review, the changes include increasing both Saudi Arabian stocks and China A-shares within the emerging markets index. The updates will mark the second and final step in the inclusion of the MSCI Saudi Arabia index, pushing the country’s weighting in the emerging markets index from 1.45 per cent to 2.83 per cent.

Read: Are tensions between China and the U.S at trade war level yet?

When it comes to the China A-shares, the MSCI will raise the inclusion factor of 260 existing constituents from 0.1 to 0.15, and it will add eight new A-shares to its China index with an inclusion factor of 0.15. Once the changes are implemented, China-A shares will hold a weight of 2.46 per cent in the emerging markets index. This is the second of three planned steps to increase China A-shares in MSCI’s emerging markets index.

“The successful implementation of the initial five per cent inclusion of China A-shares has been a positive experience for international institutional investors and has fostered their appetite to increase further their exposure to the mainland China equity market,” said Remy Briand, MSCI managing director and chairman of the its index policy committee, in a press release at the outset of China’s increased inclusion earlier this year.

Read: What does MSCI inclusion of Chinese A-shares mean for institutional investors?

As for the MSCI global standard indexes, 15 securities are set to be added while four are being removed. The three largest additions to the MSCI’s world index by full market cap will be two U.S.-based companies, Roku Inc. and Sarepta Therapeutics, as well as Air Canada.

Meanwhile, the MSCI ACWI Islamic index is set for more significant changes, with the coming addition of 39 new securities and the removal of 30.