Twenty-six China A shares will be added to the MSCI China Index, while 30 equities from Saudi Arabia and eight Argentine securities are set to join the MSCI’s emerging-market stocks benchmarks, in steps that could potentially draw billions of dollars of investor inflows.
MSCI, which announced the additions of Saudi Arabia and Argentina last June, said the stocks will join its indexes as of the close of trading on May 28. Argentina will account for 0.26% of the MSCI Emerging Markets index, while Saudi Arabia will have a 1.42% weight. China A shares will be left with a 1.76% weight in the broad developing-nation gauge, it said. The China gauge will have 31 additions in total, including five that are not A shares.
Kuwait stocks, which had been on the firm’s watch list for a potential upgrade, weren’t included.
MSCI is the world’s biggest index compiler and its emerging-markets index is the most important for the asset class, with as much as $1.8 trillion in assets benchmarked to it as of June 2018.
The stocks are being added at a time when developing-nation assets are in the midst of a sell-off tied to increased Sino-American trade tensions, with Chinese shares in particular in the firing line.
Saudi Arabia’s stocks have also suffered from geopolitical tensions, trimming gains fueled by expectation for MSCI’s decision. The Tadawul All Share Index slumped 3.6% on Monday, the most since the killing of journalist Jamal Khashoggi in October.
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