June 1, 2018 / 2:17 AM / a year ago

Chinese shares dip in early trade on MSCI inclusion day

SHANGHAI, June 1 (Reuters) - Chinese stocks started the month on a down note on Friday as the long-awaited inclusion of big cap shares from China in MSCI’s emerging markets index failed to buoy the market or attract an immediate flood of foreign money.

The Shanghai Composite Index and the benchmark CSI300 both dipped about a half a percent in early trading, while Hong Kong’s Hang Seng China Enterprises Index , which tracks mainland shares, was up a touch.

On Friday, about 230 yuan-denominated mainland A-shares were included in MSCI’s emerging markets index for the first time in a step toward deeper integration of China’s bourses with the rest of the world.

The inclusion led to a net influx of about $1 billion in funds from offshore via the stock connect schemes that link Hong Kong’s exchange with the mainland’s on Thursday as passive funds tracking MSCI’s index shifted money into China to rebalance their holdings.

Some had expected $10 billion of inflows on the day, although active funds have been gradually raising their investment in Chinese shares over the past two months.

The Chinese shares added to MSCI’s emerging markets benchmark have a 2.5 percent partial inclusion factor. The second phase of the inclusion will take place on Sept. 3, raising the factor to 5 percent.

For more stories on China’s MSCI inclusion, click on

Reporting by John Ruwitch and Samuel Shen; Editing by Sam Holmes

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