MSCI Inc. will remove 60 stocks from the MSCI China Index this month, continuing the trend from earlier removals. China's share of the Emerging Markets gauge stood at 22.33% by July.
Deletions from MSCI's indexes may lead to further decline in China's market as index-tracking funds like iShares MSCI China ETF may sell these shares, shifting attention to other emerging markets like India and Taiwan.
The removed stocks in MSCI's China Index will help in distributing the weight more evenly among other markets like India, Korea, and Taiwan, providing more balance for EM investors according to Marvin Chen from Bloomberg Intelligence.
In contrast, MSCI will be adding stocks to its India gauge, with HDFC Bank expected to gain the most, representing a potential shift in focus towards Indian equities.
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