FTSE Russell Completes China A Share Inclusion

China Options Markets To Follow U.S. Model
  • FTSE Russell successfully completes phase one of China A Share inclusion into global equity benchmarks
  • China A Shares now constitute approximately 6% of the FTSE Emerging Index
  • 1,051 large, medium and small-cap China A Shares now included in FTSE Emerging All Cap Index
  • Landmark move reflects China’s ongoing progress toward market reforms and increased access for global investors

FTSE Russell, the global index, data and analytics provider, has successfully completed the first phase of inclusion of China A Shares into its global equity indexes following the September 2018 reclassification of China A Shares to Secondary Emerging market status. The first phase, which was implemented across four separate tranches beginning in June 2019, added 25% of the investable market cap of 1,051 small, medium, and large cap China A Shares to the FTSE Emerging All Cap Index. This is the first international index provider covering different size segment of companies into the inclusion.

Waqas Samad, CEO, FTSE Russell and Group Director of Information Services, LSEG said:
“Today’s successful completion of the first phase of China A Shares inclusion into our global equity benchmarks is a landmark in the development of China’s capital markets, enhancing access for international investors. Over twenty years ago, FTSE Russell was the first international index provider of mainland China benchmarks and we look forward to continuing to work with customers to provide benchmark and analytic solutions across both equity and fixed income investments in the future.”

Jessie Pak, Managing Director, FTSE Russell and Head of Information Services, APAC, LSEG said:
“We are pleased to have completed the first phase of the inclusion of China A shares in the FTSE Emerging Index. Approximately 1,050 small, medium, and large cap firms are included in the FTSE Emerging All Cap index, enabling a greater diversity of exposure. FTSE Russell is the first international index provider covering different size segment of companies and we have received positive feedback from index users on our approach throughout the process. We will continue to work with our customers and regulators to assess the timetable for future phases of A Share inclusion.”

China A Shares now represent approximately 6% of the FTSE Emerging Index, which is tracked by approximately $140 billion in investor assets. Plans for additional phases will be based on future market developments. FTSE Russell formally reviews country classifications within its FTSE Global Equity Index Series using a transparent and consistent methodology. FTSE Russell’s comprehensive approach to country classification is informed by feedback from a broad set of market participants and provides investors with a framework for evaluating and investing in global equity markets.

The review incorporates ongoing country classification research against FTSE Russell’s Quality of Markets criteria and feedback from FTSE Russell’s independent external advisory committees to designate markets as Developed, Advanced Emerging, Secondary Emerging or Frontier.

Source: FTSE Russell

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