(Yicai Global) Sept. 23 -- The decision of S&P Dow Jones Indices, which is a stock market index producer and a joint venture between S&P Global, the CME Group and News Corp., to add China's A-share market of domestically traded shares to S&P Emerging BMI (Broad Market Index) will take effect for the first time today, with a partial inclusion factor of 25 percent.
As per the quarterly adjustment on Sept. 6, about 1,099 A-shares may be added to S&P Dow Jones Indices initially, including 147 large-cap stocks, 251 mid-cap ones and 701 small caps. The firms listed in the second-board market will initially not be involved.
Specific sectors that are the target companies of such inclusion are finance, industry, consumer necessities, information technologies, optional consumption, materials, healthcare, real estate, public utilities, energy and telecom services successively, according to the weights.
Future expansion is just a matter of time, but the details depend on the each year's inquiry results, Priscilla Luk, managing director, head of global & design, Asia Pacific, at S&P Dow Jones Indices, told Yicai Global, adding as for now, overseas investments are mostly concerned with the abundance of derivatives (stock-index futures) and satisfying their demand for risk management.
This is also another globally-renowned index company's inclusion of China's A-share market after Manhattan-based MSCI and British stock market index provider FTSE Russell.
Considering partial limitations on foreign investment, lack of derivatives and other factors, S&P Dow Jones currently adds A-share-listed firms into the index system as per 25 percent of the float adjusted market capitalization of each such company. With the 25-percent inclusion, the Chinese A-share market's weights in S&P Global BMI, S&P Emerging BMI, S&P China BMI and Dow Jones Global Index are 0.7, 6.2, 16.7 and 0.6 percent, respectively.
Editors: Zhang Yushuo, Ben Armour