MSCI will wait before adding China stocks; China shares higher despite decision

Mainland Chinese shares regained ground after opening lower, despite the decision of US index provider MSCI to wait before including China-listed shares in one of its key benchmark indexes.

MSCI Inc. said late Tuesday that it will delay adding mainland China-listed shares until “a few important remaining issues related to market accessibility have been resolved.”

The firm said in a statement it “expects to include China A-shares in its global benchmarks” once those issues are resolved, and that it plans to form a working group with Chinese stock regulator China Securities Regulatory Commission to address the concerns.

The delay was perceived as a setback in China's attempts to open up its financial markets and attract foreign capital.

At the open, trading of mainland shares have been volatile but continue to hit new peaks.

The Shanghai Composite was up 0.7% to 5,146.69 after falling over 2% earlier.

According to analysts, even though MSCI said the decision around China-listed shares would remain on its 2016 review list, the delay shows that global asset managers still have reservations about Beijing's willingness to fully open up its capital markets.

"The early morning announcement suggests that China needs to step up its efforts to liberalise the A shares (Shanghai) market, in particular, increasing foreign participation," said Bernard Aw, market strategist at IG Markets in a note.

Shares in China National Nuclear Power (CNNPC) surged 20% in their Shanghai debut after raising $2.1bn (£1.3bn) in the country's largest initial public offering since 2011, says BBC News.

Hong Kong's Hang Seng index was up 0.3% to 27,067.63 points.

The eventual inclusion of Chinese A-shares in MSCI’s key indexes — especially the benchmark Emerging Markets Index tracked by an estimated $1.7 trillion in assets worldwide — is expected to provide a strong, though likely temporary, boost to Shanghai stocks, says MarketWatch.