The CEO of FTSE Russell said that there will be 2.5 trillion US dollars of incremental funds flowing into the Chinese securities market within five to ten years.

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The CEO of FTSE Russell said that there will be 2.5 trillion US dollars of incremental funds flowing into the Chinese securities market within five to ten years.

2018-09-28 00:25:06 111 ℃


Beijing time on September 27th at 7:30, FTSE Russell announced its 2018 The results of the annual market classification review announced that the Chinese A-share market will be officially upgraded to the emerging market level and will be included in the FTSE Global Equity benchmark in June 2019.

After the results were announced, the Shanghai Stock Exchange reporter interviewed FTSE Russell CEO Mark Makepeace for the first time. He said that the A-share plan was included. In the first stage, the inclusion factor is 25% of the market value of China's A-share investment, and it is estimated that more than 10 billion US dollars of passive new capital will flow into A-shares.

He pointed out that the A share is included in the implementation plan The scope of the FTSE China A Stock Connect All Cap Index is eligible for large, medium and small stocks. After initial screening, there are approximately 1,200 constituent stocks.

In terms of specific operations, Mai Siping said that FTSE Russell plans to complete the entire integration process in three steps, starting in June 2019 and ending in March 2020.

He also expects that passive funds entering the Chinese market in the form of tracking indices will reach $2.5 trillion in the next five to ten years.

Future five to ten years

Probably inflows of approximately $2.5 trillion

Future Russell announced this morning that China’s A-shares will be officially included in its index. How much incremental funding will it bring to A-shares?

In this regard, Mai Siping told reporters: "In the initial stage, there will be more than 10 billion US dollars of passive new funds flowing into A shares. Five years ago, FTSE Russell Introduced the transitional index of China's A-share market. One of our largest customers, Vanguard Group, also timely followed the transitional index. This $10 billion is an asset that the US Pioneer Group has invested in A-shares in the early days. Added above."

Mai Siping emphasized that the inclusion factor of 25% is the investment ratio of A shares, but there is still a lot of room for the future. Because the ratio of investables refers to the proportion that foreign investors can reach, because the current A-share market still has certain restrictions on the shareholding ratio of overseas investors, it may be further relaxed in the future.

"There are about $25 trillion of passive funds in the world to track the two major index companies, FTSE Russell and MSCI. We believe that the size of the Chinese market will account for $25 trillion in the future. More than 10%, or about $2.5 trillion in passive funds, is expected to flow into the A-share market in the next five to ten years."

September 2020

The next step is to improve factor inclusion

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So, what is the future work plan for FTSE Russell in the future? What is the specific time node for incorporating China A shares?

Mai Siping said: "First of all, 25% of the first phase, we will be completed in three phases, the specific time nodes are 2019 June, September 2019, and March 2020.”

“After that, we will spend half a year, according to the company’s established working methods and standards. Communicate with global customers, understand the situation, listen to feedback, and then decide whether to further increase the inclusion factor of China A-shares.”

“We hope to reach a goal in September 2020. Consensus, announce our decision to work next."

More than 1,200 stocks will be included in the first batch

In the first stage of the inclusion of China A-shares Which stocks may become the subject of inclusion? Mai Siping introduced the standard of FTSE Russell to the reporter.

He pointed out that the scope of the A-share implementation plan is eligible for the FTSE China A Stock Connect All Cap Index. Large, medium and small stocks, as of August 31 this year, the total number of constituent stocks has 1,249 stocks.

in these 1249 stocks FTSE Russell still has certain screening criteria:

The first is scale. When FTSE Russell is included in China A shares, all large, medium and small cap indexes will be considered, but Stocks that are too small will be removed;

The second is liquidity, and stocks that are too liquid will not be considered;

The third is demanding in the past Within one year, the relevant target cannot have a history of voluntary suspension.

Mai Siping said: "The rejection does not meet the above three criteria After the target, the initial list of the targets we have delineated is about 1200 constituents.”

Incorporating the target's 1249 stocks

Editor: Roth Young