Investors are betting that publisher MSCI will add Chinese mainland stocks to its flagshp emerging markets index Tuesday after rejecting them three times. Fred Katayama reports.
Foreign investors are betting index publisher MSCI will add Chinese mainland stocks to its flagship Emerging Markets Index later Tuesday. They've stepped up purchases of blue-chip stocks. Templeton's emerging markets guru Mark Mobius says China is his top investment pick partly because China may become a member of that club. SOUNDBITE: MARK MOBIUS, EXECUTIVE CHAIRMAN, TEMPLETON EMERGING MARKETS GROUP (ENGLISH) SAYING: "Now China is on the cusp of being upgraded by the emerging markets indices, that's number one. They've already gone through this credit rating downgrade. I don't think that's going to be lengthened or repeated. And they're going through this financial reform which will be very good." China's so-called A shares that are considered for inclusion make up the majority of its stock market. Chinese stocks have been rejected by MSCI three times, but investors think they'll be included this time because MSCI recently relaxed its criteria. If included, A shares will make up about 0.5 percent of the MSCI Emerging Markets Index. This comes at a time when passive investing is all the rage in the U.S, whereby investors put money in funds that track an index.