Business News

CCTV Script 14/06/16

– This is the script of CNBC's news report for China's CCTV on June 14, Tuesday.

Welcome to CNBC Business Daily, I'm Qian Chen.

On Tuesday at 5pm ET, MSCI, the largest indexing firm in the world, will announce whether they will include mainland China stocks in their global indices.

Right now, only Hong Kong and China shares that are listed in overseas markets (like the U.S.) are included.

Inclusion of mainland China stocks would be an important development. China's mainland market is roughly $6 trillion - nearly a tenth of the world's stock market capitalization, which stands at roughly $69 trillion.

China's authorities have made inclusion in global indices a major priority.

What will MSCI do? Much of the debate in the last year has centered around whether mainland China is truly ready for prime time.

MSCI passed on including the mainland shares last year.

Chinese authorities have worked to address the specific concerns of MSCI, which is simply reflecting the concerns of the global investing community.

[Frank Troise, Leonteq Securities (Singapore) Managing Director] They need to create more liquidity, they need to create more transparency, they need to create more governence, China has been pretty pragmaticly improving in regards of how they execute on this. So here, the equity markets, the inclusion of A shares at the same time, create more liquility for their own fix-income markets, these are important long-term steps for them as part of their 5 year plan."

MSCI ponited out a few issues last year and China has been working on it.

During China's stock market meltdown earlier this year, more than 1,400 stocks were halted for anywhere from a few days to a few months, many at the whim of the company's management.

This caused havoc with foreign investors who had to deal with redemption requests.

Chinese authorities have now set the maximum period for a stock halt at three months - showing some progress there.

Beneficial ownership was another concern.

Can foreign investors get enough to invest (quotas), and can they get the money out when they want to?

This is a critical question for mutual funds and ETFs, which have to deal with daily demands for investments and redemptions.

Chinese authorities have clarified that they will be able to get adequate allocations of stock based on the size of their firm, and are now allowing daily repatriation of money.

[FRANK TROISE, Leonteq Securities (Singapore) Managing Director] "What's interesting tho, taking both to hedge funds and traders with the short-term folks, this is now giving them an opportunity to actually execute on their view. So one of the things we are quite curious to see is the short-term effect of the index and the shares inclusion, and the longer-term, its interesting when you get people who short the market or not participating in it, to actually see the manifest as well."

CNBC's Qian Chen, reporting from Singapore.

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