Msci Inc. · NYSE:MSCI
Msci — Investor Presentation (February 2019)
20 slides from Msci's investor presentation, February 2019
Slide 1: Further Weight Increase of China A Shares in MSCI Indexes
FURTHER WEIGHT INCREASE OF CHINA A SHARES IN MSCI INDEXES February 2019 © 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.
Slide 2: Executive Summary
EXECUTIVE SUMMARY • MSCI announced on February 28, 2019 that it will increase the weight of China A shares in the MSCI Indexes using a 3-step inclusion process beginning with the May 2019 Semi- Annual Index Review • On completion of this three-step implementation, there will be 253 Large and 168 Mid
Slide 3: Three Step Inclusion Process
THREE STEP INCLUSION PROCESS MSCI will increase the weight of China A in the MSCI Indexes as per the following schedule Inclusion Step Timing 1 Increase the inclusion factor of China A Large Cap shares from 5% to 10% and add ChiNext May 2019 Semi Annual Large Cap shares with a 10% inclusion factor I
Slide 4: China's Market Liberalization Efforts / MSCI China A Shares Inclusion Journey
MSCI CHINA A SHARES INCLUSION JOURNEY 2002-2012 QFII and RQFII schemes were launched in 2002 and 2011; both were relaxed and expanded in 2012 2013 June 2013 MSCI CHINA A SHARES INLCUSION EFFORTS CHINA’S MARKET LIBERALIZATION EFFORTS QFII repatriation rules relaxed; First RQFII awarded MSCI puts Chin
Slide 5: Pro-Forma Weight in MSCI EM Index
PRO-FORMA WEIGHT IN MSCI EM INDEX Step 1 Step 2 Step 3 AR, 0.3% AR, 0.3% AR, 0.3% SA, 1.4% SA, 2.7% SA, 2.7% Others, China x A, 21.5% Others, China x A, China x A, Others, China x A, 30.2% Others, 21.0% 29.6% 29.0% 20.3% 28.6% 20.5% MSCI EM MSCI EM MSCI EM Current 10% 15% 20% BR, 7.8% MSCI EM BR, 7.
Slide 6: Feedback from the Consultation
FEEDBACK FROM THE CONSULTATION • Overwhelmingly positive support on further weight increase of China A Shares ─ Over 90% of investors MSCI consulted with* supported the proposal on increasing China A Large Cap inclusion factor to 20%, including China A Mid Cap stocks at 20% inclusion factor, and inc
Slide 7: Accessibility Issues to Be Addressed Beyond 20%
ACCESSIBILITY ISSUES TO BE ADDRESSED BEYOND 20% International institutional investors also stressed that a future weight increase of China A shares in the MSCI Indexes beyond 20% would require Chinese authorities to address the following accessibility concerns • Access to hedging and derivatives ─ T
Slide 8: Appendix: Update on market liberalization developments in China
APPENDIX Update on market liberalization developments in China © 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document. 8
Slide 9: Broad Participation Since the Initial Inclusion
BROAD PARTICIPATION SINCE THE INITIAL INCLUSION Since the announcement of the MSCI China A shares inclusion, more than 5,600 new Stock Connect accounts have been opened to trade China A shares and the total Northbound Connect portfolio value grew by US$84 billion Number of SPSA accounts Northbound C
Slide 10: Significant Advancements in Accessibility Issues Highlighted in Previous Consultations
SIGNIFICANT ADVANCEMENTS IN ACCESSIBILITY ISSUES HIGHLIGHTED IN PREVIOUS CONSULTATIONS Market Accessibility Issue Status of Resolution Highlighted in Previous Consultation • QFII and RQFII Quota Allocation (2015) • Harmonization of QFII and RQFII into a single scheme with simplified qualification re
Slide 11: Market Liberalization Continues to Date
MARKET LIBERALIZATION CONTINUES TO DATE The pace of market opening continued to accelerate during the past few months Latest opening up measures in the China financial sector May 18 Aug 18 January 2019 MSCI MSCI January 2019 CSRC launched a November 18 successfully successfully December 18 consultat
Slide 12: Appendix: Update on trading suspension
APPENDIX Update on trading suspension 12 © 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.
Slide 13: SSE/SZSE Trading Suspension/Resumption Guidance
SSE/SZSE TRADING SUSPENSION/RESUMPTION GUIDANCE • Narrowing down the list of approved reasons for trading suspension: Suspensions arising from restructuring not involving share offering, non-public share offering, outward foreign investment and conclusion of material contracts are forbidden • Shorte
Slide 14: Significant Reduction in Trading Suspensions
SIGNIFICANT REDUCTION IN TRADING SUSPENSIONS Trading Suspension in Since June 2017 300 250 200 150 100 Average less than 20 suspensions on a daily basis since end 50 of 2018 0 Based on the full China A shares universe of over 3,000 securities 14
Slide 15: Appendix: Further weight increase in MSCI ACWI, Asia ex Japan and China Indexes
APPENDIX Further weight increase in MSCI ACWI, Asia ex Japan and China Indexes 15 © 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.
Slide 16: Pro-Forma Weight in MSCI ACWI Index
PRO-FORMA WEIGHT IN MSCI ACWI INDEX Step 1 Step 2 Step 3 China A China A China A China A 0.18% 0.27% 0.42% 0.09% China x A, Large Cap #: Large Cap #: China x A, Large Cap + China x A, China x A, Large Cap #: 3.6% 253 253 3.6% Mid Cap #: 421 3.6% 3.6% 239 (12 ChiNext) (12 ChiNext) (27 ChiNext) Rest o
Slide 17: Pro-Forma Weight in MSCI Asia ex Japan Index
PRO-FORMA WEIGHT IN MSCI ASIA EX JAPAN INDEX Step 1 Step 2 Step 3 ID MYPH ID MYPH ID MYPH ID MYPH TH PK TH PK TH PK TH PK SG SG SG SG China x A, China x A, China x A, China x A, MSCI MSCI 34.5% MSCI 34.0% 35.1% IN, 10.1% 34.8% IN, 10.0% IN, 9.9% MSCI EM IN, 10.2% Asia x JP Asia x JP Asia x JP Curren
Slide 18: Pro-Forma Weight in MSCI China Index
PRO-FORMA WEIGHT IN MSCI CHINA INDEX Step 1 China A Step 2 Step 3 China A China A China A 2.32% 4.69% 6.88% 10.43% Large Cap #: Large Cap #: Large Cap #: Large Cap + 239 253 253 Mid Cap #: 421 (12 ChiNext) B shares, (12 ChiNext) (27 ChiNext) 0.2% B shares, B shares, 0.2% B shares, Foreign 0.2% Forei
Slide 19: About MSCI
ABOUT MSCI For more than 45 years, MSCI’s research-based indexes and analytics have helped the world’s leading investors build and manage better portfolios. Clients rely on our offerings for deeper insights into the drivers of performance and risk in their portfolios, broad asset class coverage and
Slide 20: Notice and Disclaimer
NOTICE AND DISCLAIMER This document and all of the information contained in it, including without limitation all text, data, graphs, charts (collectively, the “Information”) is the property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or