China's progress toward full inclusion of its stocks in global benchmarks could be halted if the world's second-largest economy cracks down further on people moving money out of the country, index provider MSCI's top executive said on Monday.
In recent months China has been tightening its grip on individuals and businesses trying to move money out of the country in an effort to stabilize a faltering yuan, although it has sometimes denied the measures were an effort to impose new capital controls.
The yuan fell nearly 7 percent against the dollar last year, its biggest loss since 1994, under pressure from sluggish economic growth and a strong dollar.
A decision last June by New York-based MSCI to welcome the onshore Chinese stocks called "A shares" into its MSCI Emerging Markets Index could usher in hundreds of billion of dollars from asset managers, pension funds and insurers.
"If they reverse course and they restrict the 'out' door, then how can we?" MSCI Chairman and Chief Executive Henry Fernandez told Reuters. "It's going to be hard for the MSCI to put the A shares into the index because we will not be doing a good service to our clients."