[Exclusive] China A-Shares' Steadiness During Virus Shows Maturer Market, MSCI Research Head Says
DATE:  Feb 18 2020
/ SOURCE:  yicai
[Exclusive] China A-Shares' Steadiness During Virus Shows Maturer Market, MSCI Research Head Says [Exclusive] China A-Shares' Steadiness During Virus Shows Maturer Market, MSCI Research Head Says

(Yicai Global) Feb. 17 -- Overseas investors generally have positive comments on the Chinese mainland's A-share exchanges' reopening as scheduled, Wei Zhen, head of research at MSCI China, said in a recent exclusive interview with Yicai Global, adding this market for domestic shares did not suspend trading under the impact of the novel coronavirus pneumonia outbreak as it did during the 2015 across-the-board share price collapse, his research team also found, and this reflects a market that has more greatly matured.

Neither severe acute respiratory syndrome nor avian influenza, Ebola or Middle East respiratory syndrome have had a tremendous effect on the global market and these diseases have neither caused it to fall over 10 percent nor affected its overall trends or had any other long- or mid-term impact, Wei noted, saying each pestilence has its own features and economic developmental background and they thus cannot be contrasted with one other, so it is inappropriate to compare the current pneumonia epidemic with SARS.

China has a greater share in the global economy than 17 years ago during the SARS outbreak, Wei stated. The country's portion of global trade rose to 11 percent in 2018 from 5 percent in 2003, according to World Bank statistics. The country's slice of the MSCI Emerging Markets Index also climbed to 34.3 percent from 7.86 percent in that period. The revenue exposure of listed companies in different countries and industries to Chinese influences has furthermore more than trebled since 2006, the MSCI database indicates.

Public health events and geopolitical shocks may keep cropping up in future, but futures markets with good liquidity, both local and overseas, will help distribute the selling pressure in the physical market, MSCI's research has discovered. The A-share market should have more risk-hedging tools, Wei suggested, as this will also help MSCI to expand the inclusion of A shares in its indexes.

The New York-based indexer has no plans to extend its inclusion of A-shares for now, however, Wei noted, adding encouraging various participants to express different points of view is of greater importance, and the swelling ranks of foreign institutional investors over the past two years has accelerated the A-share market's maturity.

The 2015 event Wei referenced occurred in early July when China's stock market slumped in its lowest-ever nadir and over half of listed companies suspended trading of their shares, citing 'planned major asset restructuring' to spare their share prices from further drops in panic selling.

Editors: Xu Wei, Ben Armour

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Keywords:   MSCI,novel coronavirus,A-Share Market