Revisiting MSCI equity indexes review

Recently, Morgan Stanley Capital International (MSCI), a leading provider of research-based indexes and analytics, announced the results of the November 2019 Semi-Annual Index Review for the MSCI Equity Indexes. MSCI is a leading provider of critical decision support tools and services for the global investment community.

The review includes the MSCI Global Standard, MSCI Global Small Cap and MSCI Micro Cap Indexes, the MSCI Global Value and Growth Indexes, the MSCI Frontier Markets and MSCI Frontier Markets Small Cap Indexes, the MSCI Global Islamic and MSCI Global Islamic Small Cap Indexes, the MSCI Pan-Euro and MSCI Euro Indexes, the MSCI US Equity Indexes, the MSCI US REIT Index, the MSCI China A Onshore indexes and the MSCI China All Shares Indexes. All changes will be implemented as of the close of November 26, 2019.

MSCI Frontier Markets Indexes: There will be four additions to and eight deletions from the MSCI Frontier Markets Index. The three largest additions to the MSCI Frontier Markets Index measured by full company market capitalisation will be Nova Ljubljanska Banka (Slovenia), Ho Chi Minh City Dev Bank (Vietnam) and Commercial Bank Ceylon (Sri Lanka).

There will be 13 additions to and 17 deletions from the MSCI Frontier Markets Small Cap Index. Ecobank Transnational Incorporated Plc (ETI) and FBN Holdings Plc are two NSE listed stocks that will exit the MSCI frontier markets index.   The exiting stocks have far underperformed the NSE benchmark index (-16.68 percent) year-to-date (ytd). ETI at N7 per share has lost 50percent of its year open value while FBN Holdings at N5.45 per share has decreased this year by 31.3percent.

Planned weight increase of China A shares in Emerging Markets: MSCI will implement the third step of the previously announced weight increase of China A shares in the MSCI Emerging Markets Indexes.

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Two hundred and four China A shares, 189 of which are Mid Caps, will be added to the MSCI China Index and the inclusion factor for 268 existing constituents will be increased from 0.15 to 0.20. China A shares will have weights of 12.1percent and 4.1percent in the MSCI China and MSCI Emerging Markets Indexes, respectively. In addition, the list of pro forma China A securities for the November 2019 Semi-Annual Index Review has been updated

MSCI Global Standard Indexes: 278 securities will be added to and 69 securities will be deleted from the MSCI ACWI Index. In the MSCI World Index, the three largest additions measured by full company market capitalization will be Blackstone Group (USA), Match Group (USA) and Pinterest A (USA). The three largest additions to the MSCI Emerging Markets Index measured by full company market capitalization will be Csc Financial A (Hk-C) (China), Hansoh Pharmaceutical (China) and Sbi Life Insurance Co (India).

MSCI Global Small Cap Indexes: There will be 311 additions to and 234 deletions from the MSCI ACWI Small Cap Index.

MSCI Global Investable Market Indexes: There will be 493 additions to and 207 deletions from the MSCI ACWI Investable Market Index (IMI).

MSCI Global All Cap Indexes: There will be 343 additions to and 208 deletions from the MSCI World All Cap Index.

MSCI Global Islamic Indexes: Twenty-seven securities will be added to and 64 securities will be deleted from the MSCI ACWI Islamic Index. The three largest additions to the MSCI ACWI Islamic Index measured by full company market capitalization will be Constellation Software (Canada), Wuxi Apptec Co H (China) and Wuxi Apptec A (HkC) (China). There will be four additions to and four deletions from the MSCI Gulf Cooperation Council (GCC) Countries IMI Islamic Index.

MSCI US Equity Indexes: There will be eight securities added to and five securities deleted from the MSCI US Large Cap 300 Index. The three largest additions to the MSCI US Large Cap 300 Index measured by full company market capitalization will be Blackstone Group, Ihs Markit and Sba Communications A.

Twenty securities will be added to and 19 securities will be deleted from the MSCI US Mid Cap 450 Index. The three largest additions to the MSCI US Mid Cap 450 Index measured by full company market capitalization will be Zoom Video Comm A, Dish Network A and Incyte Corp.

Seventy-four securities will be added to and 35 securities will be deleted from the MSCI US Small Cap 1750 Index. The three largest additions to the MSCI US Small Cap 1750 Index measured by full company market capitalisation will be Stericycle, Acuity Brands and Highwoods Properties.

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There will be 20 additions to and 33 deletions from the MSCI US Micro Cap Index. For the MSCI US Investable Market Value Index, there will be 131 additions or upward changes in Value Inclusion

Factor (VIFs), and 106 deletions or downward changes in (VIFs). For the MSCI US Investable Market Growth Index, there will be 138 additions or upward changes in Growth Inclusion Factors (GIFs), and 141 deletions or downward changes in GIFs.

MSCI US REIT Index: There will be three additions to and no deletions from the MSCI US REIT Index. The additions to the MSCI US REIT Index will be City Office Reit, Jernigan Capital and Global Medical Reit.

MSCI China A Onshore Indexes: There will be 47 additions to and 38 deletions from the MSCI China A Onshore Index. The three largest additions to the MSCI China A Onshore Index will be Csc Financial Co A, Avary Holding Shenzhen A and Shenzhen Huiding Tech A. There will be 320 additions to and nine deletions from the MSCI China A Onshore Small Cap Index.

MSCI China All Shares Indexes: There will be 62 additions to and 20 deletions from the MSCI China All Shares Index. The three largest additions to the MSCI China All Shares Index will be Csc Financial Co A, Hansoh Pharmaceutical and Shenzhen Huiding Tech A. There will be 330 additions to and 37 deletions from the MSCI China All Shares Small Cap Index.