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Your guide to the Chinese stocks joining the MSCI Club



Around 234 companies in the world's second-largest stock market have received their ticket to the MSCI Inc. Global Stock Indices.

MSCI, the world's leading stock market index compiler, has released on Monday the final list of Chinese stocks will be included in its benchmarks at the end of May 31. This means that for the first time investors will have to buy yuan stocks if they want to closely follow the benchmark values ​​and open up China's vast stock market landscape – with its large swings and [19659] unique idiosyncrasies – to bond and mutual funds Track MSCI gauges.

First, do not expect much impact. Only a small portion of the market capitalization of selected stocks will be added, and it will occur in two steps: June and September. This means that A-shares will initially account for about 0.39 percent of the MSCI Emerging Markets Index weighting next month.

Read more: China Loves the MSCI Scramble, Hates Manipulators: Shuli Ren

What will investors do? Here are some of the most notable inclusions:

FOOD AND BOOZE

  • The shares of Kweichow Moutai Co. ̵
    1; China's largest liquor producer – were so beloved by investors towards the end of last year that the government expressed concern about the pace of profits. The company, which sells high-end spirits for more than $ 300 a bottle, is now worth $ 146 billion, or about the size of Walt Disney Co.
  • Other distillers and winemakers: Wuliangye Yibin Co., Jiangsu Yanghe Brewery Co. and Shanxi Xinghuacan Fen Wine Factory Co.
  • Food and beverage stocks in general were hot topics. Pig Breeder Muyuan Foodstuff Co. has more than doubled in the past 12 months, spice producer Foshan Haitian Flavoring & Food Co. has grown 81 percent and is a cash-rich dairy producer Inner Mongolia Yili Industrial Group Co. has risen nearly 50 percent.

DRUGMAKERS

  • No other industry has performed so well this year, with an indicator of Mainland China's health shares up 19 percent. Drug manufacturers are considered to be protected by a US trade war because they generate the bulk of domestic sales, while faster time to market and government support could support revenues. MSCI applicants include Huadong Medicine Co. Ltd., a manufacturer of antibiotics, Tasly Pharmaceutical Group Co. Ltd., which markets traditional Chinese remedies, and Jiangsu Hengrui Medicine Co. Ltd., the nation's largest drug manufacturer market value. 19659010] For more esoteric treatments, there is Guangzhou Baiyunshan Pharmaceutical Holdings Co., the manufacturer of China's version of Viagra. Another is Dong-EE-Jiao Co. Ltd., which makes donkey skin gels to fight cancer and blood disorders.

MONITORING STATE

  • The grip of the country through digital surveillance – it will add 400 million security cameras by 2020, according to Morgan Stanley – Hangzhou Hikvision Digital Technology Co. has become a top stock for foreign investors by the Hong Kong Connection made. Zhejiang Dahua Technology Co. is another stock in this field.

MILITARY:

  • On the other hand, some defense stocks have had a hard time this year. Jihua Group Corp., which supplies weapons and uniforms for China's military, has plummeted 29 percent, while China Nuclear Engineering Corp. Ltd. and China Spacesat Co. both fell by nearly 10 percent.

ELECTRIC CARS:

PRICEY PICKS:

  • Chinese mainland stocks have long traded at a premium over those in Hong Kong, and the MSCI list includes some expensive names. Iflytek Co. is rated at 174-fold reports, while Jinduicheng Molybdenum Co., which mines and processes a dark metal to make steel, trades at 133 times reported revenue.

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