SHANGHAI, June 21 (Reuters) - Chinese stocks gave only a lukewarm reception on Wednesday to an move by index provider MSCI to add some mainland Chinese stocks to one of its key benchmarks, with traders saying a "Yes" decision had already been largely priced in.
By late morning the blue-chip CSI300 index was up 0.6 percent at 3,568.74 points. The Shanghai Composite Index gained 0.2 percent to 3,147.39.
While the CSI300 has lagged a global stock rally so far this year, it had surged nearly 8 percent since mid-May, partly on expectations of the MSCI decision.
As a result, traders said the news prompted some investors to take profits in blue-chips, which are no longer considered cheap after their recent run-up.
Some also attributed the market apathy to the largely symbolic nature of the MSCI decision.
The U.S. index publisher will add 222 yuan-denominated A shares to its MSCI Emerging Markets Index, with an initial weight of just 0.73 percent, and the change will only take effect beginning in June 2018.
"The result is not a surprise," said Hu Yuanzhi, Shanghai-based fund manager at Rationalstone Investment, noting that even ahead of the announcement, some investors were pocketing gains.
She added that the China market still has a long way to go before it can gain true global recognition and attracts "sizable" amount of foreign capital.
The CSI SWS Securities Index, which tracks securities companies, was up around 1.4 percent but it soon retreated and was basically flat.
Rakesh Patel, head of Asia Pacific equities at HSBC, said:
"Flows in the short term are actually (expected to be) quite modest, probably about $12-14 billion of flows from active and passive in year one after inclusion.
"But on a five-10 year view, there's potential for $500 billion worth of inflows, which is huge. This is based on full-weight, full inclusion for both MSCI and FTSE."
In Hong Kong, the Hang Seng index was down 0.2 percent at 25,800.98.
The H-share index of mainland China firms was down 0.6 percent. It had firmed about 6 percent in recent weeks.
"We're positive on the Chinese market but we prefer H-shares because we think there's more chance of A-share investors buying the H-shares...," said Sean Taylor, Asia Pacific chief investment officer at Deutsche Asset Management.
"But we have to note that in certain stocks, we can get exposure in the A shares to industries we can't get in H-shares." (Reporting by Samuel Shen and John Ruwitch; Editing by Kim Coghill)