MSCI China A-Share Inclusion Day: Jonathan Krane’s Letter to Shareholders
By Jonathan Krane, KraneShares Chief Executive Officer
I am writing from the floor of the Shanghai Stock Exchange on a historic day for both China’s capital markets and investors around the world. I am joined by Henry Fernandez, Chairman and Chief Executive Officer of MSCI Inc., a leading global index provider with over $13.9 trillion in benchmarked assets1, Mr. Jiang Feng, President of the Shanghai Stock Exchange, the fourth largest stock exchange in the world with a market capitalization of $5.2 trillion USD2 and Mr. Li Hui, Executive Vice President of the Shenzhen Stock Exchange, the eighth largest stock exchange in the world with a market capitalization of $3.7 trillion USD2.
We are here to commemorate the first day of inclusion of Mainland listed Chinese equities (A-shares) into MSCI’s Global Standard Indexes. This is a significant moment for both China and global investors who will increase their allocation to the world’s second largest equity market over the coming years.
According to a recent report from MSCI “Chinese stocks — A-shares and other share classes — could comprise more than 40% of the MSCI Emerging Markets Index. Additionally, should China A mid-cap shares ever be added to the index, Chinese companies would represent nearly one out of every two investment opportunities available to emerging-market investors3”.
Today’s inclusion reaffirms the premise for founding KraneShares in 2013. During my years living in China, I quickly discovered many long term positive growth trends and opportunities while building a company there. When I returned to the U.S. I believed that China would become a much more important allocation in global portfolios. We started KraneShares with a singular focus on China and providing global investors with world-class education, products and access to one of the largest and fastest growing economies and markets in the world.
We partnered with MSCI in 2014 to launch the KraneShares Bosera MSCI China A-Share ETF (NYSE: KBA). Today we are proud to say that KBA has the longest track record and is the largest MSCI-linked China A-share ETF in the United States by assets under management4. KBA is benchmarked to the MSCI China A Inclusion Index, MSCI’s exact definition of the China A-share market, designed to track the progressive partial inclusion of A-shares in the MSCI Emerging Markets Index over time.
Today’s event strengthens our core belief that the opening up of China’s capital markets is producing one of the most significant transformations in global finance that we may see in our lifetimes.
I am happy to discuss the China A-share market and access solutions with any investor who has questions. Please contact us.
This article is intended for educational purposes only and should not be construed as investment advice. All opinions or views expressed in this article are current only as of the date of this article and are subject to change without notice.
- As of December 31, 2017, as reported on March 31, 2018 by eVestment, Morningstar and Bloomberg
- Data from World Federation of Exchanges as of 3/31/2018
- Chin Ping Chia "The world comes to China" MSCI, 5/23/2018
- Data from Bloomberg as of 4/30/2018
The KraneShares ETFs are distributed by SEI Investments Distribution Company (SIDCO), 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Fund. Additional information about SIDCO is available on FINRA’s BrokerCheck.