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MSCI, a leading provider of financial market indices, has announced the launch of the MSCI China A 50 Index, a tradable proxy for the broader MSCI China A Index, its parent index.

The MSCI China A 50 Index is designed to act as a tradable proxy for the broader MSCI China A Index.

The new index is composed of the largest 50 constituents of the flagship parent index, ranked by domestic free float-adjusted market capitalisation, and is designed to be able to serve as the basis for index-linked investment products such as exchange-traded funds (ETFs).

By including the 50 largest Shanghai and Shenzhen listed A shares, and excluding Special Treatment securities (those which carry risk warnings and are under threat of delisting), the MSCI China A 50 Index is a representative and easily replicable alternative to the MSCI China A Index.

The index is also designed for reduced turnover, while remaining closely correlated to its parent index and sharing the same quarterly rebalancing schedule with a majority of the MSCI global index families.

“We have seen significant demand for a tradable version of our MSCI China A Index,” said Theodore Niggli, Managing Director and Head of the MSCI Asia Index Business. “We expect the new MSCI China A 50 Index will serve as the basis for a number of index-linked investment vehicles, ultimately providing investors with more choices for gaining exposure to the China A share market.”

The index will compete against the FTSE China A50 Index, from FTSE Group, which, like the MSCI China A 50, tracks the 50 largest A-Share companies listed on the Shanghai and Shenzhen stock exchanges.

From an investor perspective, the two indices do much the same job. The FTSE index has a head start, however, having launched in 2003, and already forms the basis of a number of ETFs, including the physically-backed CSOP FTSE China A50 RQFII ETF (82822) and the synthetically-replicated iShares FTSE A50 China Index ETF (2823). Both these funds are listed on the Hong Kong Stock Exchange.