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citing recent steps taken by Beijing to remove obstacles for
global money managers to invest in the country's equity markets.
The U.S. bank joins a growing list of investors and brokers such
as Blackrock and Franklin Templeton's Mark Mobius who have given
Beijing a thumbs up in recent weeks ahead of the MSCI's decision
on June 14.
Goldman said on Tuesday that measures taken by authorities with
respect to beneficial ownership of shares and clarifying
guidelines on stock suspensions has improved the chances of
inclusion to 70 percent from a coin toss in April.
But inclusion is unlikely to trigger an avalanche of capital
flows into China. Even a 5 percent weighting in the MSCI indexes
will roughly translate into a net $15 billion in inflows into
"A" shares, tiny in comparison to daily turnover or size.
Last June MSCI decided against including "A" shares in the
index, which is a global benchmark for some $1.5 trillion of
assets, due to investment restrictions.
Since then, China has addressed many of MSCI's concerns by
relaxing its $81 billion Qualified Foreign Institutional
Investor (QFII) scheme, a quota-based foreign investment scheme,
and clarifying foreign ownership rights, prompting MSCI to
reconsider inclusion of "A" shares.
Chinese stocks plunged in mid-2015 after authorities tried to
crack down on rampant speculation, and markets have yet to
recover.
Despite Tuesday's bounce, Chinese stocks are the worst
performing in Asia so far this year with the Shanghai stock
market down a fifth, while the Hong Kong index is down 5
percent, according to Thomson Reuters data.
(Reporting by Saikat Chatterjee and Michelle Price; Editing by
Kim Coghill)
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