MSCI Culls Another 60 Chinese Stocks From Its Indexes

MSCI, the global index compiler, will remove a further 60 Chinese stocks from its gauges – its third consecutive cull this year, after its latest quarterly review, it said in a statement on Monday.

Some 56 companies trading on exchanges on mainland China and four in Hong Kong will be removed from the MSCI China Index at the end of August, MSCI said.

The move showed the “waning significance” of Chinese equities in overseas investors’ portfolios, the South China Morning Post said on Tuesday, noting that global investors have been underweight on such stocks for a few years amid Western curbs technology companies and the prolonged property crisis.

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Major stocks on the A-share market set to be removed include carmaker Beiqi Foton Motor and People.cn, the state media and advertising group, plus Hong Kong-listed shop operator China Tourism Group Duty Free, Ganfeng Lithium Group and GF Securities, the statement showed.

These changes will also affect the MSCI Emerging-Markets Index and the MSCI All Country World Index, it said. At the end of July, Chinese on- and offshore stocks accounted for about 22% of the weighting of MSCI’s emerging-market gauge.

They are expected to be mostly replaced by equities from India, Japan and Korea.

Just two Chinese stocks will be added to MSCI’s indexes this month – Victory Giant Technology, which makes printed circuit boards, plus Huaneng Lancang River Hydropower, which makes power generation equipment.

The latest removals follows 122 equities that MSCI removed in May and February. Despite recent interest from hedge funds, Goldman Sachs said recently that Chinese stocks were still near a five-year low.