Article / 31 May 2016 at 10:21 GMT

China stocks leap on MSCI inclusion speculation

Saxo Capital Markets China
  • SHCOMP jumps 3.34%, Growth Enterprise Market Index 4.92%
  • Both indices up in heavy volumes, driven by increased overseas buying
  • Goldman sees increased chances of China A shares' inclusion in MSCI index
  • China shares also gain on talk that Shenzhen-HK link-up will be launched soon
Shenzhen stock exchange
 Chinese stocks outperformed on increased likelihood that mainland-China shares 
will be included in the MSCI index. Photo: iStock

By Jay Luo

Chinese stocks surged on Tuesday in heavy volume on expectations that mainland-listed stocks, known as "China A shares", will be included in MSCI’s Emerging Markets Index this June and also a rumour that the Shenzhen and Hong Kong Stocks Connection will be launched soon.

The benchmark Shanghai Composite Index surged 3.34% to 2,916.62 points, its biggest one-day gain since March 2. The Growth Enterprise Market Index, consisting of growth stocks, leapt 4.92% to 2,159.80. Both indices broke their downward trendline since early April in heavy volume and filled the price gap left on May 9.

Shanghai Composite Index, daily chart
Shanghai Composite Index, Daily

Source: EastMoney

A Goldman Sachs report released this morning said the likelihood of China A shares’ inclusion in the MSCI index has risen to 70% from 50%.

Capital inflow data showed overseas investors net bought more than 3.4 billion yuan of A shares on Tuesday via the Shanghai-Hong Kong stocks connection channel, the biggest one-day net inflow in four months. Net capital inflow via this channel amounted to 8 billion yuan in the past five trading days, a sign of overseas fund managers’ rising interest in A shares.

Growth Enterprise Market Index, daily chart
Growth Enterprise Market Index, Daily
Source: EastMoney

— Edited by John Acher

Jay Luo is an editor and analyst at Saxo Capital Markets in China


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