MSCI Cuts China Stocks Again in Global Indexes
MSCI has removed dozens of China stocks from its global indexes while continuing to add Indian securities following a rebalancing of the index.
The changes, which come into effect Aug. 30, will see 60 Chinese securities removed from MSCI’s global indices, alongside seven Indian securities added.
The latest move comes after MSCI said it was adding five Indian stocks and removing 66 Chinese companies in the MSCI Emerging Markets index at the end of February. MSCI also removed a further 56 Chinese stocks in May.
Japan, Malaysia and Korea will also see stock additions to MSCI’s global indices.
In addition, the MSCI China index will have 69 Chinese securities removed from the index, with two additions including hydro power company Huaneng Lancang and electric product manufacturer Victory Giant.
After the February rebalance of the MSCI Emerging Markets index the weight gap fell to its lowest point, with India’s weighting expected to grow from 17.9% to 18.5%, and China’s falling to 25.4%.
India Tops Emerging Markets Growth
Investor sentiment surrounding India and China continues to diverge, with the former showing rapid economic growth, political stability and favorable geopolitical positioning, particularly with the U.S. Last year, India reported GDP of 8.15%, surpassing estimates, according to a report by Deloitte. The country has averaged 8.3% annual growth over the past three years, the report noted.
Meanwhile, China has been hindered by issues in its property sector, deflation and regulatory pressures on tech companies.
Elsewhere, DWS switched the index of its $56 million emerging markets ETF to exclude China in a bid to meet investor demand for more “regionally differentiated investments.”
The IShares MSCI India ETF (INDA), which tracks an index of the top 85% of Indian firms, is up more than 17% year-to-date.
The $4.4 billion KraneShares CSI China Internet ETF (KWEB), which focuses on Chinese internet stocks, has dipped about 2% year-to-date, while the $4.3 billion IShares MSCI China ETF (MCHI), which tracks an index of Chinese equities, is up about 5% in 2024.
This story first appeared in etf.com's sister publication, ETFStream.com.