The likelihood of Chinese stocks finally being included in MSCI Inc.’s global indexes in June has improved sharply following the government’s moves to restrict trading halts and clarify beneficial ownership rules according to senior management at Softbank CIBC International.

These measures have tackled two of the five matters raised by MSCI in April regarding the inclusion of A-shares on its respected indexes Softbank CIBC International explained to clients in a research note, Tuesday. Tony Harris, who as Senior VP or Equity Trading at the firm oversees investment of over $8 billion in institutional funds said he was less optimistic.

“These changes are obviously very positive,” Harris wrote. “Furthermore, we think that the probability of inclusion in June would be noticeably improved if the Shenzhen-Hang Seng Connect were to come into being.”

Softbank CIBC International added that China must now deal with the remaining issues of a 20% monthly fund repatriation restriction, onerous, anti-competitive clauses on index products and daily quota limits on a cross border stock program.

China’s mainland stock indexes have largely settled down since the turmoil that rocked them at the beginning of 2016 and the huge falls of last summer but Harris said that he didn’t see the country’s A-stocks being included until the end of the year or potentially in 2017.

China’s stocks gained the most in almost three months amid the inclusion speculation. The Shanghai Composite Index closed more than 3% higher.

“We still very much prefer Chinese stocks to overpriced US equities right now and that’s reflected in an overweight bias in our representative portfolio,” explained Harris.


About Softbank CIBC International:
Softbank CIBC International (SCIBCI) LLC was founded in Tokyo, in 2007. Since our inception, we have grown to become one of the leading institutions in providing North America and European investors’ with access to Asia’s high yielding emerging market opportunities. With retail operations located in Toronto, the provisional capital of Ontario, Canada and corporate headquarters in Tokyo, Japan, in the simplest possible terms, it is SCIBCI’s sole aim to generate consistent high returns on investment through our solid commitment to conscientious and assiduous research and analysis.