Goldman Sees Huge Buying Into China ADRs Upon Full MSCI InclusionBy Shuli Ren
Indexer MSCI will conduct the 2nd tranche of
U.S.-listed Chinese companies into its benchmark indexes on May 31, after markets close.
Once MSCI finishes the 2nd tranche, the benchmark MSCI China index will have much higher “New China” weights. Tech companies will make up 31% of MSCI China’s weight, from 25% previously, while onerous banks’ weight will drop to 17% from 19%.
Goldman Sachs estimates that
Alibaba (BABA), Baidu (BIDU) and JD.com (JD) will represent 8.4%, 5.2% and 1.7% in MSCI China, and 2.2%, 1.4% and 0.5% in MSCI Emerging Markets.
We can expect to see a large amount of inflow upon the full MSCI inclusion. Assuming
$1.5 trillion is tracking MSCI Emerging Markets, Goldman estimates the 2nd tranche of inclusion could usher in $43 billion of net buying - 87% active and 13% passive – for 13 Chinese ADRs, taking an average 14.4 days of net buying at the stock level.
Apart from the three mentioned above, the other ten stocks are:
NetEase (NTES), Ctrip.com (CTRP), Qihoo 360 (QIHU), New Oriental (EDU), Vipshop (VIPS), 58.com (WUBA), TAL Education (XRS), Qunar (QUNR), Soufun (SFUN) and YY (YY).
Is it too late to buy into the 13 ADRs?
Not too late, according to Goldman:
Source: Barron's Asia
http://blogs.barrons.com/asiastocks/201 ... inclusion/
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