Thursday, June 11, 2015

FX Notes - CNY - MSCI Exclusion - Another Spur - 10 Jun 2015

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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