How China is dominating emerging market funds

A decade ago, the emerging market index was dominated by Taiwan and South Korea, and China accounted for a meagre 4%. Now China makes up 26%.

佘仲文 20 October, 2016 | 5:00PM

At its May 2016 index review, MSCI completed the addition of a number of U.S.-listed Chinese companies into its MSCI Global Investable Market Indexes. As a result, China's weighting has increased in a number of key indexes, and its role in global portfolios has also been amplified. This has various implications for portfolio managers and investors.

China's progressive financial market liberalisation has spurred numerous IPOs and the success of many Chinese companies such as Tencent (TCEHY), which has been reflected in their gigantic market capitalizations.

This has had a significant impact on the evolution of China's weighting in the MSCI Emerging Markets Index. A decade ago, the index was dominated by Taiwan and South Korea, and China accounted for a meagre 3.69%. Fast forward to June 30, 2016, and China has become the largest country weighting at 25.79%.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alibaba Group Holding Ltd ADR272.95 USD-0.85
Baidu Inc ADR122.92 USD-0.89
Tencent Holdings Ltd ADR65.50 USD-1.33

About Author

佘仲文

佘仲文  佘仲文為晨星投資管理(亞洲)

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