MSCI is removing dozens of Chinese companies from its global benchmarks following a broad market decline. The index provider deleted 66 Chinese stocks from the indexes, the largest number of exclusions in at least two years, but added five Indian stocks to its Global Standard index without making any deletions.
These changes come amid an increasingly negative perception of China by Western powers due to geopolitical tensions. This is leading Western investors to pivot more to India as an alternative investment destination. Although, challenges remain as India’s economy still has a long way to go in order to reach the level of development seen in China’s economy particularly in infrastructure quality.
India now has the second-highest weight in the MSCI Global Standard index, behind China, and has roughly doubled its weight in the index since November 2020. Chinese stocks that will be removed include China Southern Airlines, Ping An Healthcare and Technology, and real estate developers Gemdale and Greentown China. The large-cap index now includes state-owned lenders Punjab National Bank and Union Bank of India, while the mid-cap index now includes Bharat Heavy Electricals and NMDC.
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