China Loses Ground In Global Indexing as MSCI Cuts Nearly 200 Stocks in 2024
Chinese stocks have had a rough year — but things have gotten a lot worse since MSCI, a global investment research firm known for its influential stock indexes, decided to reduce its holdings in Chinese companies for the third consecutive quarter. The MSCI Global Standard index has slashed ~200 Chinese entities this year, driven by a desire to diversify away from China while giving other emerging economies, particularly India, more room to shine on the global stage.
- The latest cut impacts 60 Chinese businesses, including Kingnet Network and GF Securities, adding to the previous reductions made in May (56 companies) and February (66 companies).
- Bloomberg Intelligence’s Marvin Chen believes, “The large weighting and impact of China earlier may be more evenly distributed to other markets such as India, Korea and Taiwan.”
The dragon’s dominance is fading: As China’s influence in global markets wanes, other Asian economies are gaining ground. The assets of BlackRock’s iShares MSCI Emerging Markets ex-China ETF have surged to $14.9B as of Aug. 12, reflecting a shift in investor preference away from the iShares MSCI China ETF, which has dwindled to about $4.3B. This trend is supported by strong performance in other indexes like Japan’s Topix and Nikkei 225, buoyed by resilient US retail data and Walmart’s robust performance — signaling a potential shift in the balance of power in Asian markets.
