According to Bloomberg, 66 major companies will be removed from the MSCI China index following a significant plunge in the Chinese stock market. MSCI, a leading American index provider overseeing global stock markets, expects its benchmark index in China to encounter several challenges in the near future. The global stock index compiler has announced that it would drop 66 securities from the MSCI China Index after a recent market plunge that brought trillions of dollars in losses for organizations. Among the companies deleted from the MSCI China index are real estate developers Gemdale and Greentown China Holdings, China Southern Airlines, and healthcare software developer Ping An Healthcare and Technology. However, there is a silver lining amidst the gloom. Five new companies will be added to this Chinese index. Yet, this does not alter the big picture, as this is still the largest reduction in the number of firms listed in the MSCI in the past two years. The changes will take effect at the close of trading on February 29, 2024, affecting not only the Chinese index but also the global MSCI All Country World index. Analysts estimate that this decision could inflict significant damage on the Chinese stock market, which is desperately trying to prevent further declines. Consequently, funds tracking the MSCI index may need to remove stocks of companies that have dropped out of the index from their portfolios. This could trigger a new wave of sell-offs and potentially lead to another market downturn. According to experts, the global significance of the Chinese market is rapidly diminishing. Many major investors prefer the booming Indian stocks, as well as reliable financial instruments in the United States and Europe. The Japanese stock market is also in demand, with its national index Nikkei 225 reaching its highest point since 1990. Chinese authorities are trying to stabilize their stock market. Yet, experts emphasize that government support only yields short-term results. Consequently, after each surge, Chinese stocks head downwards once again.
