Monday, 20 November, 2017

Investors react to MSCI

A brokerage house in Shanghai. The market in China’s A shares is worth about $7.5 trillion making it the world’s second largest A brokerage house in Shanghai. The market in China’s A shares is worth about $7.5 trillion making it the world’s second largest Aly Song Reuters
Saul Franklin | 24 June, 2017, 01:24

Adding Chinese shares to the MSCI Emerging Markets index will reduce South Korean shares in the index, which could trigger outflows of at most 4.3 trillion won ($3.8 billion) of foreign investment, it said.

Taiwan plans to create an index with South Korea, made up of technology and high-dividend shares, to keep investors from exiting, Chi-hsien Lee, president of the Taiwan Stock Exchange, told Reuters on Wednesday. The amount could increase to US$340 billion if more A-shares are included in future.

And that presents a risk for Australia's stock market, particularly for large cap stocks. MSCI's inclusion set the global stage for China; what "shows" will be performed on the stage and when they will start are determined by China. Yet, remember China now maintains capital controls on financial markets; thus, the supply of Chinese stocks available for overseas investors is determined by the pace of China further opening up its markets. With so much historical data available, investors may choose to look at many different time frames when examining a stock.

The index was up 1.2 percent in the first hour of trade as some shares which were top gainers on the previous day continued to rally with the only listed miner Saudi Arabian Mining jumping surging its 10 percent daily limit in the first half hour of trade.

Accelerating corporate profits have been a big reason for the stock market's gains this year, and energy companies had been forecast to provide some of the biggest gains.

The China Securities Regulatory Commission said on Wednesday that it welcomed MSCI's decision and will improve its rules to meet the needs of foreign investors.

US existing home sales unexpectedly rise in May
Last month the median U.S. existing home price for all to housing types was $258,800 up from last June's high of $247,600. That was up 1.1% from a downwardly-revised April sales pace, and beat economists' expectations of a 5.51 million pace.

Microsoft Xbox One X Price Confirmed: Does The Pricing Meet Customers' Expectation?
The Microsoft console will also boast a 12 GB GDDR5 graphics memory, clocked at an impressive 1,172 MHz and 1 TB HDD. Microsoft is definitely keeping it real as the company prepares to launch the all-new Xbox One X.

PVG Asset Management Corp Buys Shares of 101684 Vodafone Group PLC (VOD)
JPMorgan Chase & Co. reaffirmed a "neutral" rating on shares of GlaxoSmithKline plc in a research note on Wednesday, May 31st. Guggenheim Capital Ltd Com holds 0.14% of its portfolio in Regions Financial Corp (NYSE:RF) for 3.39 million shares.

Shares of iShares MSCI Chile Capped ETF (ECH) have a 200-day moving average of 40.29.

The stocks will be added in a two-step process starting in May 2018 and will represent 0.7 percent of the index. 2,458,484 shares of the stock traded hands.

Tom Orlik, chief Asia economist at Bloomberg Intelligence, highlighted that China did take steps to increase its openness to win this marginal MSCI inclusion - for example by setting up Stock Connect programs that allow investors to buy A-shares in the Hong Kong market. As Chinese equities, bonds, currency enter into global benchmarks, investors can no longer ignore China as they used to, because doing so will have an impact on their relative performance.

However, observers said the small number of firms taking part - 222 large-cap firms will join initially meaning they make up just 0.73 per cent of the overall index - meant there would be little early impact.

"As it now stands, Chinese equities are not unattractive from a valuation (Shanghai trades at 16 times PE) and earnings growth perspective". Traders may use the indicator to determine stock trends or to identify overbought/oversold conditions. "We think the pace of reforms could accelerate after the leadership transition in the fall, and such is needed to underpin our cautiously constructive outlook on the Chinese economy/market over the medium to long term".

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