“$400 billion will move into Chinese stocks based on a decision today…” I wrote in DailyWealth in 2015.
The big decision would have triggered hundreds of billions of dollars to flow into Chinese A-share stocks over the next five to seven years. But in June 2015, the decision I expected was not what we got.
Again, in June 2016, I expected it to happen. And again, it didn’t.
[ad#Google Adsense 336×280-IA]Then, late last week – out of the blue, and with NO media publicity or fanfare – we saw the first proof that what I’ve been writing about is coming true, and SOON.
It will be the biggest story in finance over the next five to seven years… Yet shockingly, NOBODY is talking about it.
I am certain I am right about this idea.
Earlier, I got the prediction right but the timing wrong… And now it’s finally time to take advantage of it.
What is this big story?
Let me briefly explain…
China is the world’s second-largest economy. And its local stock market is the world’s second-largest stock market. The crazy thing is, NOBODY owns local Chinese stocks (known as “A-shares”)…
This HAS to change. Here’s why…
Typical global-fund managers own the world’s stock markets roughly according to the size of those stock markets. So the U.S. is their largest holding, then Europe, and so on.
The crazy part is, global-fund managers currently allocate roughly ZERO percent to Chinese A-shares.
Why? Because their benchmark indexes allocate roughly zero percent to Chinese A-shares.
When the benchmark indexes change to include Chinese A-shares, global-fund managers will be forced to buy them. Lots of them. Hundreds of billions of dollars’ worth. It’s as simple as that.
So here’s what happened last week…
The leading provider of global indexes is a company called MSCI. Last week, with no fanfare, MSCI announced the creation of 20 (20!) new indexes that will include Chinese A-shares. These new indexes reflect the first inclusion of Chinese A-shares in MSCI’s major indexes – all the way up to its world indexes!
The first part of the story from MSCI tells us everything we need to know…
MSCI is pleased to announce the upcoming launch of 20 new illustrative indexes, reflecting the effect of a potential 5% partial inclusion of China A-shares into the MSCI Emerging Markets Index…
The new illustrative indexes will be launched in late September 2016. More details on the new indexes will be shared at launch date.
BAM! All right!
This is the moment I’ve been waiting for…
Chinese stocks have finally “made it” to the big time… They will be included in the MSCI Emerging Markets Index. They will also be included in MSCI’s All-Country World Index.
The crazy part is, nobody cares. Nobody is talking about it – yet.
This is a big moment. Hundreds of billions of dollars will flow into Chinese stocks over the next five to seven years.
Get your money there first.
Good investing,
Steve
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Source: Daily Wealth