Barely a month after approving the inclusion of Chinese shares in its benchmark emerging market index, MSCI is warning that companies in China that suspend trading in their shares for too long risk being dropped.
MSCI's head of research for Asia Pacific, Chin Ping Chia, said China was an outlier in global markets with too many suspensions in stock trading. He said the U.S. index provider was closely monitoring the 222 China-listed A-shares that will be added to its Emerging Markets Index next year.
"If we find a company suspends for a long time, over 50 days, we will remove it from the index, and we will not bring it back to the index again for at least another 12 months," Chia said.
The 12-month removal rule would be limited to Chinese companies. Companies from other markets who are removed from the index due to a long suspension of trading would be able to start a review process for reinclusion once they resumed trading.
