On August 11, local time, the international index compilation company MSCI announced the results of the August quarterly index review.
This quarter’s adjustments announced the new and deleted lists of major index series such as the MSCI Global Standard Index, MSCI China A-Share Onshore Index, and MSCI China All Stock Index. The relevant adjustments will take effect on September 1, 2022.
Specifically, this time the MSCI Global Standard Index added 13 stocks and eliminated 8 stocks. Specifically, as for the MSCI China A-Share Index, 7 new stocks were added and 2 stocks were eliminated. The seven newly added targets this time are Tongrentang , China Merchants Shipping , Paineng Technology, Salt Lake Shares , Tianqi Lithium Industry , Yuntianhua , and Zangge Mining.
Since MSCI China Index is nested into the MSCI Emerging Markets Index, entering the MSCI China Index means that the stock has entered the MSCI Global Standard Index series and will be tracked by a large amount of passive funds.
It is worth mentioning that among the 7 new Chinese stocks included in the MSCI China Index, 5 companies have businesses closely related to the new energy sector , namely Paineng Technology, Salt Lake Shares, Tianqi Lithium, Yuntianhua, and Zangge mining
In addition to the global index series, the component lists of the MSCI China All-Share Index, the MSCI China A-Share Onshore Index and the China All-Share Small Cap Index have also been adjusted. However, the number of overseas funds tracking these three indexes is relatively small. Smaller, the adjustment may not bring significant capital in and out.
The MSCI China A Shares Onshore Index has newly included 7 constituent stocks, including Penghui Energy, Dingsheng New Materials , Salt Lake Holdings, Peneng Technology, Quartz Holdings, Dier Laser, and Aotevei, and eliminated 5 constituent stocks. , including Capital Holdings , Lanfan Medical , Zhongnan Construction, Biotech Co., Ltd. and North China Pharmaceutical. The three largest new companies in terms of total market value are Salt Lake Holdings, Peneng Technology and Quartz Holdings.
The MSCI China A Onshore Small Cap Index will add five items and delete nine items.
The MSCI China All-Share Index will add 8 items and delete 2 items. The top three market capitalizations of the MSCI China All-Share Index are Salt Lake Holdings, Peneng Technology, and Quartz Holdings.
The MSCI China All-Share Small Cap Index will add 2 items and delete 13 items.
Data shows that MSCI will evaluate the index constituent stocks in the middle of each quarter (mid-February/mid-May/mid-August/mid-November) to decide whether to add or remove new ones. The specific adjustment standards are not officially announced by MSCI. There is no explanation. In principle, stocks will be selected based on factors such as liquidity, company market value, and industry representativeness. Liquidity is the indicator that MSCI pays most attention to.
The results of this MSCI adjustment will be implemented after the market closes on August 31, 2022, and will officially take effect on September 1.
Generally speaking, due to the influence of arbitrage funds, stocks that are early in the adjustment period (especially before the announcement), have potential surprises (not easy to predict) or have deviations in daily trading liquidity may have larger stock price reactions during this period.
MSCI is currently the most commonly used benchmark index by global portfolio managers. In order to be as close as possible to the trend of MSCI, passive funds usually choose to adjust their positions at the last time after the news is announced and before the adjustment results are officially implemented. Therefore, we often see "abnormal" amplification of transactions in stocks with large weight changes, especially during the period at the end of .
