Share prices on Chinese exchanges have been relatively stable since early 2016 and volatility this year has been exceptionally low. In recent weeks, however Chinese stock indices have fallen, largely on lower share prices for industrial firms. The Shanghai A-index is now 1 % lower than in the start of the year and the Shenzhen A-index is down 8 % for the year. This week there were a reminder of the heavy-handed role of officials in Chinese stock markets. Bloomberg reports that officials are keeping an eye on large investors and have ordered funds operating in domestic stock markets to be prepared to act if there are any surprises in the lead up to the Silk Road summit on May 14–15.
MSCI, a leading provider of international stock indices, is reconsidering whether to include Chinese A-shares in its Emerging Markets Index. A new twist is that the index could initially include only a limited selection mainland China shares traded in Hong Kong under the Stock Connect programme. The weight of Chinese shares in the index could start out small and increase gradually over time. Even so, it would be the first time that mainland Chinese shares were included in a major international stock index.
Stock market trends in China and Hong Kong
Source: Macrobond and BOFIT.