Chinese A shares have finally been included in the 1.5 trillion dollar, MSCI Emerging markets index, on its 4th try. This could lead to large capital inflows for shares traded in the Chinese mainland.

CGTN's Karina Huber spoke to Brendan Ahern, Chief Investment Officer of KraneShares in New York that has an Exchange Traded Fund that already includes China A shares.

Ahern said it was a combination of demand from its clients who want greater exposure to the Chinese mainland and the decision to only include A-shares that are traded through Stock Connect that links Hong Kong to Shanghai and Shenzhen. Going through Hong Kong allows for fewer capital restrictions than if you were to buy them directly on the Chinese mainland. But he says there are still some minor issues that need to be ironed out.

“China still does allow companies to temporarily halt their securities which can be problematic for daily liquidity providers like an ETF or an index fund but I think those are minor issues. In the long run, this is going to set off the first domino to a much, much larger weight of China for investors’ portfolios globally,” said Ahern.

222 stocks will be included, but Ahern believes with time many more will be added pushing the A-shares to about 17% of the overall index.

So what happens next? All of the index funds and ETFs that track MSCI’s emerging markets index which is about 1.6 trillion in assets will have to buy the A-shares included in MSCI, but they can only start buying them as of the end of next May when MSCI will implement the changes.

That’s for passive investors. But active investors, like hedge funds and large pension funds, will likely start buying some of those shares before then to get ahead of the trade so we could see substantial activity in the days to come.