A further weight increase for China's A shares is expected

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Global index provider MSCI is likely to increase the weighting of China's A shares in its indexes this week as more investors become bullish on China's market, said Theodore Niggli, head of Asia-Pacific index products.

"When the inclusion factor of large-cap A shares is only five percent, some investors might think the proportion of A shares is too low to make investment. However, it will not be that case when the inclusion factor is upped to 20 percent," Niggli further explains.

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In a consultation launched by MSCI in September, 2018, MSCI proposed to increase the inclusion factor of MSCI China large-cap A shares from five percent to 20 percent in two phases in May and August, 2019. The MSCI plans to announce the decisions of the consultation on or before February 28.

The inclusion factor refers to how much of a stock's market capitalization, adjusted by the MSCI, is included in its indexes.

In 2018, the U.S. index provider, MSCI, took the historic step of adding some mainland-listed shares to its global benchmarks, including Chinese banks, manufacturers, and raw-materials firms.

MSCI works as a stimulant for capital inflow into the Chinese mainland, but whether the weighting of A shares will be increased is fundamentally determined by China's capital market reform and opening-up. If market facilitation and business environment are improved, the process will be expedited, Niggli stresses.