CNY: MSCI Exclusion – Another Spur
§ MSCI
declined to add China’s A shares but the stocks will remain on the review list
for potential inclusion into Emerging Markets. In a press release, MSCI stated
that the firm will form a working group with China Securities Regulatory
Commission to achieve resolutions on issues – 1) Quotation Allocation Process,
2) Capital Mobility Restrictions, 3) Beneficial Ownership.
§ The
Shanghai Composite edged higher on the news as this new collaboration with the
MSCI is likely to spur capital account liberalization efforts. That ties in
nicely with China’s efforts for yuan to be included in IMF’s SDR basket.
§ The
impact on the yuan from this news might be muted in the short-term as CNH
remain anchored by the steady USDCNY guidance from PBOC. On the longer horizon,
expect capital account liberalization efforts to accelerate which should be a
positive step for yuan internationalization
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