MSCI’s move to exclude China’s A-listed shares from its well-known Emerging Markets Index makes one strategist cautious. ‘We’re a little concerned about the parabolic move we’ve seen in the A-Share market,’ said Mark Luschini, chief investment strategist at Janney Montgomery Scott. ‘But the H-Shares, which are Chinese-domiciled companies traded and listed in Hong Kong are selling at a 25 percent discount to their A-Share counterparts, so there’s much better valuation there.’ He said Chinese stocks have been bid up amid anticipation that they would be included in the index and stimulus from the People’s Bank of China, which is why he suggests being ‘long, but cautious.’ Luschini said MSCI’s decision is largely amid the immaturity of the Chinese markets. ‘It’s notorious that stocks listed in China are subject to a lot of retail buying and selling – a lot of speculation – if not outright manipulation.’ The iShares MSCI Emerging Markets exchange traded fund has returned about 2 percent since the start of the year. Stocks in China didn’t react well to the news. The Shanghai Composite ended Wednesday’s trading day at 5106.04, after reaching an intraday high of 5162.79. He said investors who have not yet made a commitment to investing in China should wait until stimulus efforts from the Chinese central bank have done more to improve economic conditions.
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