MSCI and FTSE could play key roles in driving foreign investors to Stock Connect through the inclusion of China’s A-shares in their indices, according to Goldman Sachs’ executive director for equities in Asia.
Goldman’s Kenneth Kok highlighted the progression of Stock Connect while also pointing to a lack of foreign participation.
“This is a market that is growing in importance,” he said. “This is a market where we want to build a bridge for foreign investors. This is a market that doesn’t have any representation on the global indices, on either MSCI or FTSE.”
“Our expectation is that further down the road those indices will have to consider the inclusion of the China A-Shares. If that happens then that will further the interest of global investors.”
The Shanghai-Hong Kong Stock Connect launched in November, and those involved in the venture are keen to drive more foreign investment activity to the Chinese markets.
Kok added that China has been very public about its aim to attract more foreign investors.
“They say that current low single digit percentage is too low,” said Kok.
One of the initiatives aimed at bolstering the link has been a new trade settlement system known as the Special Segregated Account Model (SPSA) launched this week.
Speaking at a recent Trade roundtable, George Molina, senior vice president, director of Asian trading, Franklin Templeton Investments, said: “It will be interesting in June, when MSCI does their review to see whether A-Shares get added into a global benchmark status for inclusion next year.”