MSCI semi-annual adjustment, Two Hong Kong stocks Benefits

MSCI has released the results of its semi-annual index review for November 2023, which includes the MSCI China A50 $MSCI China A50 Index - main 2312(MCAmain)$ . This is a major adjustment for the semi-annual review, so the scope of index additions, deletions, and other adjustments is wide and may have a significant impact.

Changes in constituent stocks

19 new constituent stocks have been added while 19 have been removed.

Among the new additions are Hong Kong stocks $ZHEJIANG LEAPMOTOR TECHNOLOGY CO., LTD.(09863)$ and $Brilliance China(01114)$ ), and 17 new A-share stocks have been added.

The 19 deletions include 9 Hong Kong stocks, such as $CONCH VENTURE(00586)$ $DONGYUE GROUP(00189)$, $JIUMAOJIU(09922)$ $SHENZHEN INT'L(00152)$, $YIHAI INTL(01579)$ $BEIJING AIRPORT(00694)$, $CHINA JINMAO(00817)$, $CHINARES CEMENT(01313)$ and $MEIDONG AUTO(01268)$, and another 10 A-share stocks.

The weight of some companies has been adjusted. Zero Run Car, Brilliance China, Nongfu Spring, Haiguang Information, and Legend Biotech will receive capital inflows due to an increase in weight, with the highest proportion being 0.12%.

Meanwhile, $Alibaba(09988)$ $TENCENT(00700)$, $CONCH VENTURE(00586)$, $DONGYUE GROUP(00189)$ , $JIUMAOJIU(09922)$ will see a decrease in weight due to dilution, with a range of 0.09% to 0.06%.

Passive funds track the MSCI China Index and, combined with each individual stock's average daily turnover over the past 20 days, it is expected that it will take more than 2 days to trade for Brilliance China, Far East Horizon, Nongfu Spring, and 09865. Brilliance China may even take around 15 days to trade (active funds have already begun adjusting their positions based on market trends).

The adjustments will take effect on December 1st after the close of trading on November 30th.

Active funds may adjust their positions at any time during trading, while passive funds usually choose to adjust their positions on the last day, November 30th, in order to minimize tracking errors.

Therefore, there may be "abnormal" amplification of trading volume for stocks with significant weight changes, especially during the closing session.