Mscibarra Executive Director Shesheng: China's stock market structure is close to other global markets

In April this year, the MSCI Barra (formerly the US-Morgan Stanley Capital International Corporation, "Mei Mo"), after careful consideration, decided to unify its China A-share index and the Global Series Index compilation method, tracked the listed company's current market share ratio by 65% Up to 85% of the world's other market indices.　　Shesheng, executive director of the company, said in an interview with the China Securities News reporter that the adjustment reflects the structural changes in the stock market caused by the reform and development of China's securities markets in recent years, and also reflects international investors ' recognition of the degree of international improvement of the Chinese market.　　Shesheng also pointed out that, from the point of view of stock index compilation, due to the increase of international stock relativity, the focus and investment process of global layout decision of stock market investment is changing from national angle to value angle and other subdivision angle.　　A-share structure internationalization China Securities Daily: Please brief us on MSCI's decision making process to increase the coverage of China's index market and how it has been implemented so far. Shesheng: At the end of 2008, the report of our company's own research department and the reflection of some of our overseas customers also point to the trend that, as China's securities market continues to evolve, the stock markets are gradually approaching the rest of the world's stock market, with about 13% per 85% of the total circulation value. In China's a-share market, covering 85% of the current market value of 2005 required 55% of the stock, 2008 only 30%. This reflects a significant change in the market structure.　　We then conducted a formal consultation with the company's overseas clients and fund companies in February this year, confirming the international investment Agency's acceptance of the trend, which provided a solid basis for our decision to adjust the Chinese a-share index.　　At present, preparations for the adjustment are underway, and we plan to make 50% adjustments each in August and November respectively, which makes it easier to use the MSCI China index investors to operate accordingly, reducing transaction costs and market shocks.　　China Securities Daily: From the investor's global investment layout, what is the positive influence of the market coverage ratio of the MSCI China index to the convergence of other market indices?　　Shesheng: First, the MSCI China Market Small Cap index will also be introduced after the adjustment, which will allow the MSCI China A-share index to cover up to 99% of the investment opportunities in the Chinese market. Second, this time to increase China's index market coverage to the same level as other market indices, conducive to investors in the global investment layout, more convenient to examine the changes in the Chinese market, and then increase overseas investment in the Chinese market, while promoting China's stock market internationalization process. Be aware that the MSCI American index is the benchmark for international investment that is closely followed by most institutional investors around the world. Take the Chinese market as an example, most qfii (qualified overseas institutions invest in China) selected the MSCI China A-share index, while the existing 10 qdii (qualified domestic institutional investment Overseas) Fund of 8 selected MSCI International Series index.　　Focus on value will circumvent more risk China Securities daily: While the changes of China's index market coverage, whether global stock market investment in the context of the global financial crisis and other changes in the trend? Shesheng: MSCI's own research data show that the correlation of market stocks in the global markets has increased from 40% in 1971 to 2008 years of 80%. Increased global equity relevance certainly poses a challenge to the spread of risk.　　At the same time, the value effect and scale effect of the international market (the relative performance of the growth stocks of the value stocks, the relative performance of the small stock market stocks) is increasingly obvious. A big change in global stock market investment is the idea of investment. In particular, investors in the global investment layout, the focus is from the previous national perspective to the value perspective, that is, more research on the value of the market effect, industry effects, and other effects. There are, of course, differences in the progress of such trends in the markets of different economies.　　For example, in advanced economies such as Europe and the US, investors will pay particular attention to the industry sectors where the target companies are located, while in emerging economies the value of the country's values remains relatively high. It needs to be emphasized that international investors in the global layout, increasingly use the angle of change trend.　　If the index rules can be echoed and guided, it is also conducive to investors to effectively use the market value effect to invest.　　Because of these changes, in 2008, we changed the rules of the MSCI International index to increase the market coverage of the index from the original 85% to 99%, while dividing the original index into the market, the plate and the small stock index, and can be divided from the industry, the country region, the value growth angle.　　China Securities Daily: In your opinion, what is the impact of this change in the investment concept on the investment behavior of investors in the new economy market? Shesheng: In fact, the adjustment of the index rules reflects the influence of the change of investment idea on investors ' investment trend. Global investment is already increasingly focused on opportunities in emerging economies, and we are increasing the proportion of market coverage in order to bring them closer to the real situation in the target market.