MSCI China A Shares inclusion more symbolic than actionable?

Worries linger that China’s domestically traded A-shares are overvalued when compared with global levels. In addition, there are concerns about whether China’s volatile market will adapt to international best practices.

Meanwhile, financial stocks across the region also faced selling pressure, with local weakness exacerbated by dovish comments from central banks in the U.K. and U.S. Japan’s Topix bank subindex was 1% lower, while the Hang Seng finance subindex was down 8%. In Australia, the ‘big four’ banks — Westpac Banking (WBK) , Commonwealth Bank of Australia (CBA.AU) , National Australia Bank (NABZY) , and Australia and New Zealand Banking (ANZ.AU) — fell between 1.2% and 2.1%.

In currencies, the offshore yuan gave up most of the gains accrued in the wake of MSCI’s decision. The U.S. dollar-yuan was recently trading at 6.8206, compared with 6.7164 before the MSCI news, a near nine-month high for the Chinese currency.

Speculation that demand for the yuan is coming from investors seeking to buy Chinese shares is premature, notes Stephen Innes, head trader for Asia at Oanda. Investors are “laying the groundwork,” but any actual buying of either the yuan or Chinese shares is a long way off,


The Wall Street Journal

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes