June 21, 2017 (May 27, 2017 in the lunar calendar) was a milestone in the opening up of China's stock market: A shares were included in MSCI. After four rounds, A-shares were finally successfully included in the MSCI Emerging Markets Index! At 4:30 a.m. Beijing time on June 21, 2017, Morgan Stanley Capital International (MSCI, also known as Mingsheng) announced through its official website that it had decided to include China A shares in the MSCI Emerging Markets Index and the MSCIACWI Global Index. According to the announcement, the inclusion of China A shares in the MSCI Emerging Markets Index will add 222 large-cap stocks of China A shares, which account for about 0.73 per cent of the MSCI Emerging Markets Index based on a 5 per cent inclusion factor. MSCI plans to implement this initial inclusion plan in two steps to buffer the current remaining daily limit of Shanghai Stock Connect and Shenzhen Stock Connect. The first step is scheduled to be implemented during the semi-annual index review in May 2018, and the second step will be implemented during the quarterly index review in August 2018. If the daily quotas of Shanghai Stock Connect and Shenzhen Stock Connect are cancelled or significantly increased before this scheduled inclusion date, MSCI does not rule out modifying this inclusion plan to a one-time implementation plan. Remy Briand, Managing Director of MSCI and Chairman of the MSCI Index Policy Committee, pointed out: "International investors have widely recognized the significant improvement in China's A-share market access over the past few years. Now the time is ripe for MSCI to take the first step in including China A shares. The development and improvement of the interconnection mechanism between mainland China and Hong Kong has brought revolutionary and positive changes to the opening up of China's A-share market. Hong Hao, managing director and head of the research department of BOCOM International, said that there will be a breakthrough in the fourth pass. This is another milestone in the road to opening up of China's stock market. In an interview with The Paper, he said: "The weight of A-shares in the MSCI China Index and the MSCI Emerging Markets Index will be 1.7% and 0.5% respectively, which means that the allocation scale of foreign funds in A-shares will be between 60 billion and 70 billion yuan, which is very small compared to the 40 trillion yuan circulating market value of A-shares, which brings more of an emotional boost to the market. The MSCI Index is the investment target of most international institutions, and its clients cover more than 90% of the world's fund companies. According to incomplete statistics, there are more than 750 ETF funds around the world that directly track the MSCI index, investing as much as US$10 trillion. Because of this, once the A-share market joins the MSCI Emerging Markets Index, international investors can allocate A-shares by tracking the index, which means that the A-share market will also welcome an influx of foreign funds. Reason for success: The development and improvement of the interconnection mechanism between the mainland and Hong Kong has brought revolutionary positive changes to the opening up of A-shares to the outside world. MSCI stated in a statement on June 21 that the decision to include A-shares was widely supported by international institutional investors consulted by MSCI. This is mainly due to the positive development of the interconnection mechanism between mainland China and Hong Kong, and the relaxation of restrictions on pre-approval of global financial products involving A-shares by China Exchange. These two developments have had a positive impact on improving access to China's A-share market. Remy Briand, Managing Director of MSCI and Chairman of the MSCI Index Policy Committee, pointed out: "International investors have widely recognized the significant improvement in China's A-share market access over the past few years. Now the time is ripe for MSCI to take the first step in including China A shares. The development and improvement of the interconnection mechanism between mainland China and Hong Kong has brought revolutionary and positive changes to the opening up of China's A-share market. RemyBriand said: "As the access system of China's A-share market is further aligned with international standards, the continued unimpeded access of Shanghai Stock Connect and Shenzhen Stock Connect is tested by the market, and international institutional investors gain more market experience, MSCI will accordingly increase the proportion of China A-shares in the MSCI Emerging Markets Index. MSCI fervently hopes that the policy momentum of China's active improvement of market access levels over the past few years will continue to accelerate. In March 2013, A-shares were included in the MSCI Emerging Markets Index Watch List as a potential market for the first time, and participated in the MSCI Global Market Access Review a year later. However, judging from the annual review results in 2014, 2015 and 2016, MSCI has stated that it will not include A shares for the time being, but it will still remain on the review list. Taking 2016 as an example, at that time, MSCI gave three reasons for refusing to include A shares: First, the monthly capital redemption amount of QFII investors cannot exceed 20% of their net asset value in the previous year. This restriction poses potential liquidity barriers when investors need to redeem clients 'funds. Second, the widespread voluntary suspension of trading by listed companies in mainland China has caused investors to worry about the liquidity risk. Third, the mainland has set pre-approval restrictions on financial products launched by financial institutions on any exchange around the world, resulting in investment uncertainty. In the past year, the new rules for suspension and resumption of trading of A-shares have passed the test of time, and the phenomenon of "falling limit for thousands of shares" has not reappeared. In addition, according to the new inclusion framework announced by MSCI in March, the previous inclusion plan based on the QFII/RQFII channel was abandoned, and a new framework based on "interconnection" was established. As a result, the quota limit for QFII investors is no longer an obstacle. Wang Xinjie, director of investment strategy at Standard Chartered's China Wealth Management Department, told The Paper reporter: "The latest plan announced by MSCI in March this year has thrown an olive branch to A shares, basically solving the first two problems. In fact, the third issue is relatively easy to solve, and it should be solved through consultation between MSCI and the exchange." After suggestions from institutional investors, the number of included A shares increased from 169 to 222. According to a press release issued by Mingsheng Company, MSCI conducted extensive and in-depth consultations on the issue of partially including China A shares in the MSCI Emerging Markets Index covering major regions around the world. Institutions participating in this global consultation include a large number of asset owners, asset managers, brokers/dealers and other market participants. The press release stated that international institutional investors welcome the further expansion of the connectivity mechanism and view it as a more flexible investment channel than the current QFII and RQFII. Investors are also happy to see the relatively reduced number of suspensions, but believe that the number of suspensions in A-shares is still at an abnormally high level compared with other international markets. Investors are encouraging China regulators and exchanges to consider further measures to address the issue of stock suspensions. The vast majority of institutional investors agreed to adopt MSCI's proposal to initially include only large-cap stocks that have not been suspended. In addition, many institutional investors have also suggested that MSCI consider including large-cap A shares corresponding to companies listed in the mainland and Hong Kong (whose H shares are components of the current MSCI China Index). In view of this, MSCI revised its original recommendation and decided to include all large-cap A shares that can be traded through Shanghai Stock Connect or Shenzhen Stock Connect and are not excluded due to suspension. This change will increase the number of China A shares initially included in the MSCI Emerging Markets Index to 222 from 169 in the previous proposal. MSCI said it will begin calculating provisional indices that include A-shares in multiple MSCIACWI global index series. These interim index tools are designed to provide operational guidance for global investors to implement the inclusion of A shares at specific time periods they choose. MSCI will launch the MSCI China International LargeCapProvisionalIndex on June 21, 2017, and will further launch global and regional provisional indices including A-shares in August 2017, including the MSCI China Provisional Index and the MSCI Emerging Markets Provisional Index. As for the medium-and long-term inclusion plan, MSCI stated that further inclusion of A-shares must be based on closer integration of the access status of China's A-share market with international levels. These include the market-tested interconnection mechanism, the relaxation of daily quotas for Shanghai Stock Connect and Shenzhen Stock Connect, the continuous improvement of stock suspension conditions, and further relaxation of restrictions on the creation of index-linked investment products. The next step in the process of including A-shares in the MSCI Emerging Markets Index may involve increasing the current market value inclusion factor of only 5% and adding the mid-cap A-share component. MSCI will continue to monitor policy and market conditions and conduct public consultations when conditions are ripe to solicit feedback from investors. Impact of inclusion: Limited promotion of A-shares in the short term. What impact will success have on the A-share market? Previously, CICC predicted that if A-shares are officially included in mid-2018, then the short-term capital inflows into the A-share market are statically estimated to be approximately US$9.7 billion based on the global tracking of the MSCI index system's asset size and the weights of potential inclusion targets, while Long-term capital inflows may be significantly higher than short-term estimates. Hong Hao pointed out that in view of the fact that many overseas institutions have already been deployed in advance, the current allocation of Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, QFII and RQFII in A-shares currently amounts to approximately US$200 billion. The short-term impact of A-shares in MSCI on the stock market is limited. "It will definitely be good in the long run. In the future, as the weight of A shares in MSCI increases, in addition to capital inflows, the institutionalized investment style will bring changes to A shares, or will accelerate the reform of the standardization, marketization and internationalization of A shares." He said this to the paper reporter. Wang Xinjie, director of investment strategy at Standard Chartered China Wealth Management Department, said in an interview with The Paper that after A shares entered Morocco, judging from the direct capital inflow, the promotion effect on A shares in the short term is limited, and the specific implementation according to the process will be officially launched in June 2018. In addition, under the new framework, MSCI has adopted a more smooth inclusion method for A shares. Among them, the initial A shares accounted for only 1.7% of MSCI China, a decrease of 2% from last year's old framework. After all A shares are included, the proportion of MSCI China is only about a quarter, which is still lower than the proportion of H shares. He said: "In addition to MSCI China, the three MSCI indices currently most associated with A shares and with the largest assets are the MSCI Global Index, the MSCI Emerging Markets Index and the MSCI Asia Excluding Japan Index. The proportion of A-shares included in the three major indices in the initial stage was 0.1%, 0.5% and 0.6% respectively. If the corresponding sizes of the three indices are all tracked, it is estimated that the inflows into A-shares are 2.8 billion, 7.5 billion and 1.2 billion respectively based on the static method., a total of 11.5 billion US dollars, equivalent to approximately 78.5 billion yuan. Compared with the average daily turnover of A-shares of 440.8 billion yuan this year and the current circulating market value of 40 trillion yuan, the net capital inflow brought about within one to two years after being included in MSCI cannot bring a fundamental driving effect. "Wang Xinjie believes that the long-term significance of this A-share inclusion in MSCI is far-reaching, not the short-term net inflow of funds, but to allow China's capital market to re-enter the perspective of global investors. This entry may be a new beginning. First of all, based on overseas experience, the process of integrating local capital markets into the MSCI index usually lasts for at least five years, but in essence it can change the market structure and style preferences. The increase in the proportion of institutional investors in the next few years will reduce market fluctuations to a certain extent; Secondly, with the inflow of overseas funds, the pressure on net capital outflow under capital decreases, which can stabilize the local currency exchange rate and the market's expectation of the exchange rate. Finally, the inflow of long-term funds means an increase in global demand for China's assets, which will help the internationalization of China's capital market and enhance China's pricing power and the international influence of its local currency. Attachment: Full text of MSCI press release announcing results, New York, USA, June 20, 2017-As the world's leading index supplier, MSCI Inc. (NYSE: MSCI) announced today that starting from June 2018, China A shares will be included in the MSCI Emerging Markets Index and the MSCIACWI Global Index. The decision to include A shares has received broad support from international institutional investors consulted by MSCI. This is mainly due to the positive development of the interconnection mechanism between mainland China and Hong Kong, and the relaxation of restrictions on pre-approval of global financial products involving A-shares by China Exchange. These two developments have had a positive impact on improving access to China's A-share market. MSCI plans to initially include 222 large-cap A shares. Based on a 5% inclusion factor, these A shares account for approximately 0.73% of the weight of the MSCI Emerging Markets Index. MSCI plans to implement this initial inclusion plan in two steps to buffer the current remaining daily limit of Shanghai Stock Connect and Shenzhen Stock Connect. The first step is scheduled to be implemented during the semi-annual index review in May 2018; the second step will be implemented during the quarterly index review in August 2018. If the daily quotas of Shanghai Stock Connect and Shenzhen Stock Connect are cancelled or significantly increased before this scheduled inclusion date, MSCI does not rule out modifying this inclusion plan to a one-time implementation plan. MSCI will begin calculating provisional indices including A shares in multiple MSCIACWI global index series. These interim index tools are designed to provide operational guidance for global investors to implement the inclusion of A shares at specific time periods they choose. MSCI will launch the MSCI China International LargeCapProvisionalIndex on June 21, 2017, and will further launch global and regional provisional indices including A-shares in August 2017, including the MSCI China Provisional Index and the MSCI Emerging Markets Provisional Index. Remy Briand, Managing Director of MSCI and Chairman of the MSCI Index Policy Committee, pointed out: "International investors have widely recognized the significant improvement in China's A-share market access over the past few years. Now the time is ripe for MSCI to take the first step in including China A shares. The development and improvement of the interconnection mechanism between mainland China and Hong Kong has brought revolutionary and positive changes to the opening up of China's A-share market. Briand said: "As the access system of China's A-share market is further aligned with international standards, the continued unimpeded access of Shanghai Stock Connect and Shenzhen Stock Connect is tested by the market, and international institutional investors gain more market experience, MSCI will accordingly increase the proportion of China A shares in the MSCI Emerging Markets Index. MSCI fervently hopes that the policy momentum of China's active improvement of market access levels over the past few years will continue to accelerate." MSCI has conducted extensive and in-depth consultation on the issue of partially including China's A shares in the MSCI Emerging Markets Index covering all major regions around the world. Institutions participating in this global consultation include a large number of asset owners, asset managers, brokers/dealers and other market participants. International institutional investors welcome the further expansion of the connectivity mechanism and view it as a more flexible investment channel than the current QFII and RQFII. Investors are also happy to see the relatively reduced number of suspensions suspended, but believe that the number of suspensions suspended in A-shares is still at an abnormally high level compared with other international markets. Investors are encouraging China authorities and exchanges to consider further measures to resolve the issue of stock suspensions. The vast majority of institutional investors agreed to adopt MSCI's proposal to initially include only large-cap stocks that have not been suspended. In addition, many institutional investors have suggested MSCI consider including large-cap A shares (H shares of which are components of the current MSCI China index) for companies listed on both the mainland and Hong Kong. In view of this, MSCI revised its original recommendation and decided to include all large-cap A shares that can be traded through Shanghai Stock Connect or Shenzhen Stock Connect and are not excluded due to suspension. This change will increase the number of China A shares initially included in the MSCI Emerging Markets Index to 222 from 169 in the previous proposal. During the consultation period, many institutional investors asked MSCI to provide guidance on the future inclusion blueprint of China A shares. MSCI announced today that further inclusion of A-shares must be based on closer integration of the access status of China's A-share market with international standards. These include the market-tested interconnection mechanism, the relaxation of daily quotas for Shanghai Stock Connect and Shenzhen Stock Connect, the continuous improvement of stock suspension conditions, and further relaxation of restrictions on the creation of index-linked investment products. The next step in the process of including A-shares in the MSCI Emerging Markets Index may involve increasing the current market capitalization inclusion factor of only 5%, and adding the mid-cap A-share component. MSCI will continue to monitor policy and market conditions and conduct public consultations when conditions are ripe to solicit feedback from investors.June 21, 2017 (May 27, 2017 in the lunar calendar) was a milestone in the opening up of China's stock market: A shares were included in MSCI. After four rounds, A-shares were finally successfully included in the MSCI Emerging Markets Index! At 4:30 a.m. Beijing time on June 21, 2017, Morgan Stanley Capital International (MSCI, also known as Mingsheng) announced through its official website that it had decided to include China A shares in the MSCI Emerging Markets Index and the MSCIACWI Global Index. According to the announcement, the inclusion of China A shares in the MSCI Emerging Markets Index will add 222 large-cap stocks of China A shares, which account for about 0.73 per cent of the MSCI Emerging Markets Index based on a 5 per cent inclusion factor. MSCI plans to implement this initial inclusion plan in two steps to buffer the current remaining daily limit of Shanghai Stock Connect and Shenzhen Stock Connect. The first step is scheduled to be implemented during the semi-annual index review in May 2018, and the second step will be implemented during the quarterly index review in August 2018. If the daily quotas of Shanghai Stock Connect and Shenzhen Stock Connect are cancelled or significantly increased before this scheduled inclusion date, MSCI does not rule out modifying this inclusion plan to a one-time implementation plan. Remy Briand, Managing Director of MSCI and Chairman of the MSCI Index Policy Committee, pointed out: "International investors have widely recognized the significant improvement in China's A-share market access over the past few years. Now the time is ripe for MSCI to take the first step in including China A shares. The development and improvement of the interconnection mechanism between mainland China and Hong Kong has brought revolutionary and positive changes to the opening up of China's A-share market. Hong Hao, managing director and head of the research department of BOCOM International, said that there will be a breakthrough in the fourth pass. This is another milestone in the road to opening up of China's stock market. In an interview with The Paper, he said: "The weight of A-shares in the MSCI China Index and the MSCI Emerging Markets Index will be 1.7% and 0.5% respectively, which means that the allocation scale of foreign funds in A-shares will be between 60 billion and 70 billion yuan, which is very small compared to the 40 trillion yuan circulating market value of A-shares, which brings more of an emotional boost to the market. The MSCI Index is the investment target of most international institutions, and its clients cover more than 90% of the world's fund companies. According to incomplete statistics, there are more than 750 ETF funds around the world that directly track the MSCI index, investing as much as US$10 trillion. Because of this, once the A-share market joins the MSCI Emerging Markets Index, international investors can allocate A-shares by tracking the index, which means that the A-share market will also welcome an influx of foreign funds. Reason for success: The development and improvement of the interconnection mechanism between the mainland and Hong Kong has brought revolutionary positive changes to the opening up of A-shares to the outside world. MSCI stated in a statement on June 21 that the decision to include A-shares was widely supported by international institutional investors consulted by MSCI. This is mainly due to the positive development of the interconnection mechanism between mainland China and Hong Kong, and the relaxation of restrictions on pre-approval of global financial products involving A-shares by China Exchange. These two developments have had a positive impact on improving access to China's A-share market. Remy Briand, Managing Director of MSCI and Chairman of the MSCI Index Policy Committee, pointed out: "International investors have widely recognized the significant improvement in China's A-share market access over the past few years. Now the time is ripe for MSCI to take the first step in including China A shares. The development and improvement of the interconnection mechanism between mainland China and Hong Kong has brought revolutionary and positive changes to the opening up of China's A-share market. RemyBriand said: "As the access system of China's A-share market is further aligned with international standards, the continued unimpeded access of Shanghai Stock Connect and Shenzhen Stock Connect is tested by the market, and international institutional investors gain more market experience, MSCI will accordingly increase the proportion of China A-shares in the MSCI Emerging Markets Index. MSCI fervently hopes that the policy momentum of China's active improvement of market access levels over the past few years will continue to accelerate. In March 2013, A-shares were included in the MSCI Emerging Markets Index Watch List as a potential market for the first time, and participated in the MSCI Global Market Access Review a year later. However, judging from the annual review results in 2014, 2015 and 2016, MSCI has stated that it will not include A shares for the time being, but it will still remain on the review list. Taking 2016 as an example, at that time, MSCI gave three reasons for refusing to include A shares: First, the monthly capital redemption amount of QFII investors cannot exceed 20% of their net asset value in the previous year. This restriction poses potential liquidity barriers when investors need to redeem clients 'funds. Second, the widespread voluntary suspension of trading by listed companies in mainland China has caused investors to worry about the liquidity risk. Third, the mainland has set pre-approval restrictions on financial products launched by financial institutions on any exchange around the world, resulting in investment uncertainty. In the past year, the new rules for suspension and resumption of trading of A-shares have passed the test of time, and the phenomenon of "falling limit for thousands of shares" has not reappeared. In addition, according to the new inclusion framework announced by MSCI in March, the previous inclusion plan based on the QFII/RQFII channel was abandoned, and a new framework based on "interconnection" was established. As a result, the quota limit for QFII investors is no longer an obstacle. Wang Xinjie, director of investment strategy at Standard Chartered's China Wealth Management Department, told The Paper reporter: "The latest plan announced by MSCI in March this year has thrown an olive branch to A shares, basically solving the first two problems. In fact, the third issue is relatively easy to solve, and it should be solved through consultation between MSCI and the exchange." After suggestions from institutional investors, the number of included A shares increased from 169 to 222. According to a press release issued by Mingsheng Company, MSCI conducted extensive and in-depth consultations on the issue of partially including China A shares in the MSCI Emerging Markets Index covering major regions around the world. Institutions participating in this global consultation include a large number of asset owners, asset managers, brokers/dealers and other market participants. The press release stated that international institutional investors welcome the further expansion of the connectivity mechanism and view it as a more flexible investment channel than the current QFII and RQFII. Investors are also happy to see the relatively reduced number of suspensions, but believe that the number of suspensions in A-shares is still at an abnormally high level compared with other international markets. Investors are encouraging China regulators and exchanges to consider further measures to address the issue of stock suspensions. The vast majority of institutional investors agreed to adopt MSCI's proposal to initially include only large-cap stocks that have not been suspended. In addition, many institutional investors have also suggested that MSCI consider including large-cap A shares corresponding to companies listed in the mainland and Hong Kong (whose H shares are components of the current MSCI China Index). In view of this, MSCI revised its original recommendation and decided to include all large-cap A shares that can be traded through Shanghai Stock Connect or Shenzhen Stock Connect and are not excluded due to suspension. This change will increase the number of China A shares initially included in the MSCI Emerging Markets Index to 222 from 169 in the previous proposal. MSCI said it will begin calculating provisional indices that include A-shares in multiple MSCIACWI global index series. These interim index tools are designed to provide operational guidance for global investors to implement the inclusion of A shares at specific time periods they choose. MSCI will launch the MSCI China International LargeCapProvisionalIndex on June 21, 2017, and will further launch global and regional provisional indices including A-shares in August 2017, including the MSCI China Provisional Index and the MSCI Emerging Markets Provisional Index. As for the medium-and long-term inclusion plan, MSCI stated that further inclusion of A-shares must be based on closer integration of the access status of China's A-share market with international levels. These include the market-tested interconnection mechanism, the relaxation of daily quotas for Shanghai Stock Connect and Shenzhen Stock Connect, the continuous improvement of stock suspension conditions, and further relaxation of restrictions on the creation of index-linked investment products. The next step in the process of including A-shares in the MSCI Emerging Markets Index may involve increasing the current market value inclusion factor of only 5% and adding the mid-cap A-share component. MSCI will continue to monitor policy and market conditions and conduct public consultations when conditions are ripe to solicit feedback from investors. Impact of inclusion: Limited promotion of A-shares in the short term. What impact will success have on the A-share market? Previously, CICC predicted that if A-shares are officially included in mid-2018, then the short-term capital inflows into the A-share market are statically estimated to be approximately US$9.7 billion based on the global tracking of the MSCI index system's asset size and the weights of potential inclusion targets, while Long-term capital inflows may be significantly higher than short-term estimates. Hong Hao pointed out that in view of the fact that many overseas institutions have already been deployed in advance, the current allocation of Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, QFII and RQFII in A-shares currently amounts to approximately US$200 billion. The short-term impact of A-shares in MSCI on the stock market is limited. "It will definitely be good in the long run. In the future, as the weight of A shares in MSCI increases, in addition to capital inflows, the institutionalized investment style will bring changes to A shares, or will accelerate the reform of the standardization, marketization and internationalization of A shares." He said this to the paper reporter. Wang Xinjie, director of investment strategy at Standard Chartered China Wealth Management Department, said in an interview with The Paper that after A shares entered Morocco, judging from the direct capital inflow, the promotion effect on A shares in the short term is limited, and the specific implementation according to the process will be officially launched in June 2018. In addition, under the new framework, MSCI has adopted a more smooth inclusion method for A shares. Among them, the initial A shares accounted for only 1.7% of MSCI China, a decrease of 2% from last year's old framework. After all A shares are included, the proportion of MSCI China is only about a quarter, which is still lower than the proportion of H shares. He said: "In addition to MSCI China, the three MSCI indices currently most associated with A shares and with the largest assets are the MSCI Global Index, the MSCI Emerging Markets Index and the MSCI Asia Excluding Japan Index. The proportion of A-shares included in the three major indices in the initial stage was 0.1%, 0.5% and 0.6% respectively. If the corresponding sizes of the three indices are all tracked, it is estimated that the inflows into A-shares are 2.8 billion, 7.5 billion and 1.2 billion respectively based on the static method., a total of 11.5 billion US dollars, equivalent to approximately 78.5 billion yuan. Compared with the average daily turnover of A-shares of 440.8 billion yuan this year and the current circulating market value of 40 trillion yuan, the net capital inflow brought about within one to two years after being included in MSCI cannot bring a fundamental driving effect. "Wang Xinjie believes that the long-term significance of this A-share inclusion in MSCI is far-reaching, not the short-term net inflow of funds, but to allow China's capital market to re-enter the perspective of global investors. This entry may be a new beginning. First of all, based on overseas experience, the process of integrating local capital markets into the MSCI index usually lasts for at least five years, but in essence it can change the market structure and style preferences. The increase in the proportion of institutional investors in the next few years will reduce market fluctuations to a certain extent; Secondly, with the inflow of overseas funds, the pressure on net capital outflow under capital decreases, which can stabilize the local currency exchange rate and the market's expectation of the exchange rate. Finally, the inflow of long-term funds means an increase in global demand for China's assets, which will help the internationalization of China's capital market and enhance China's pricing power and the international influence of its local currency. Attachment: Full text of MSCI press release announcing results, New York, USA, June 20, 2017-As the world's leading index supplier, MSCI Inc. (NYSE: MSCI) announced today that starting from June 2018, China A shares will be included in the MSCI Emerging Markets Index and the MSCIACWI Global Index. The decision to include A shares has received broad support from international institutional investors consulted by MSCI. This is mainly due to the positive development of the interconnection mechanism between mainland China and Hong Kong, and the relaxation of restrictions on pre-approval of global financial products involving A-shares by China Exchange. These two developments have had a positive impact on improving access to China's A-share market. MSCI plans to initially include 222 large-cap A shares. Based on a 5% inclusion factor, these A shares account for approximately 0.73% of the weight of the MSCI Emerging Markets Index. MSCI plans to implement this initial inclusion plan in two steps to buffer the current remaining daily limit of Shanghai Stock Connect and Shenzhen Stock Connect. The first step is scheduled to be implemented during the semi-annual index review in May 2018; the second step will be implemented during the quarterly index review in August 2018. If the daily quotas of Shanghai Stock Connect and Shenzhen Stock Connect are cancelled or significantly increased before this scheduled inclusion date, MSCI does not rule out modifying this inclusion plan to a one-time implementation plan. MSCI will begin calculating provisional indices including A shares in multiple MSCIACWI global index series. These interim index tools are designed to provide operational guidance for global investors to implement the inclusion of A shares at specific time periods they choose. MSCI will launch the MSCI China International LargeCapProvisionalIndex on June 21, 2017, and will further launch global and regional provisional indices including A-shares in August 2017, including the MSCI China Provisional Index and the MSCI Emerging Markets Provisional Index. Remy Briand, Managing Director of MSCI and Chairman of the MSCI Index Policy Committee, pointed out: "International investors have widely recognized the significant improvement in China's A-share market access over the past few years. Now the time is ripe for MSCI to take the first step in including China A shares. The development and improvement of the interconnection mechanism between mainland China and Hong Kong has brought revolutionary and positive changes to the opening up of China's A-share market. Briand said: "As the access system of China's A-share market is further aligned with international standards, the continued unimpeded access of Shanghai Stock Connect and Shenzhen Stock Connect is tested by the market, and international institutional investors gain more market experience, MSCI will accordingly increase the proportion of China A shares in the MSCI Emerging Markets Index. MSCI fervently hopes that the policy momentum of China's active improvement of market access levels over the past few years will continue to accelerate." MSCI has conducted extensive and in-depth consultation on the issue of partially including China's A shares in the MSCI Emerging Markets Index covering all major regions around the world. Institutions participating in this global consultation include a large number of asset owners, asset managers, brokers/dealers and other market participants. International institutional investors welcome the further expansion of the connectivity mechanism and view it as a more flexible investment channel than the current QFII and RQFII. Investors are also happy to see the relatively reduced number of suspensions suspended, but believe that the number of suspensions suspended in A-shares is still at an abnormally high level compared with other international markets. Investors are encouraging China authorities and exchanges to consider further measures to resolve the issue of stock suspensions. The vast majority of institutional investors agreed to adopt MSCI's proposal to initially include only large-cap stocks that have not been suspended. In addition, many institutional investors have suggested MSCI consider including large-cap A shares (H shares of which are components of the current MSCI China index) for companies listed on both the mainland and Hong Kong. In view of this, MSCI revised its original recommendation and decided to include all large-cap A shares that can be traded through Shanghai Stock Connect or Shenzhen Stock Connect and are not excluded due to suspension. This change will increase the number of China A shares initially included in the MSCI Emerging Markets Index to 222 from 169 in the previous proposal. During the consultation period, many institutional investors asked MSCI to provide guidance on the future inclusion blueprint of China A shares. MSCI announced today that further inclusion of A-shares must be based on closer integration of the access status of China's A-share market with international standards. These include the market-tested interconnection mechanism, the relaxation of daily quotas for Shanghai Stock Connect and Shenzhen Stock Connect, the continuous improvement of stock suspension conditions, and further relaxation of restrictions on the creation of index-linked investment products. The next step in the process of including A-shares in the MSCI Emerging Markets Index may involve increasing the current market capitalization inclusion factor of only 5%, and adding the mid-cap A-share component. MSCI will continue to monitor policy and market conditions and conduct public consultations when conditions are ripe to solicit feedback from investors.