Philip Li, senior fund manager at investment firm Value Partners in Hong Kong, said that the increased weighting — and expectations of more to come — are likely to boost investor appetites.
“When we get to 20 percent at the end of this year, would it be 50 percent, 80 percent in one or two years’ time?” Li said to CNBC on Friday.
“And I think that’s where people are thinking ‘Okay, I have to have this exposure,'” he added.
MSCI said in announcing the changes that further increases beyond 20 percent “would require Chinese authorities to address a number of remaining market accessibility questions,” which it said include “restrictions on access to hedging and derivatives instruments.”
Some said, however, that the increases may have limited impact initially.
“It doesn’t affect our view of whether a company is good or bad, nor do we feel any need to adjust our portfolios,” Nicholas Yeo, head of China equities at Aberdeen Standard Investments, said in a Friday note.
“We take a long-term view of what has historically been a volatile and momentum-driven retail market,” Yeo said.
But the trend in the increasing importance of Chinese shares ultimately can’t be ignored, he said.
“As China’s representation in global benchmarks grows, having little or no exposure to the market will increasingly become an active decision,” he said.
Correction: This article has been updated to reflect that Jerry Peng is a China equity strategist for Citi.
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