Morning Report Wednesday 10 June 2015
Why a surging Chinese Stock Market has Hammered the ASX200
Fund managers worldwide have a certain amount of money to invest in shares, bonds, property etc. Significant moves can occur in equities when these “masters of the universe” decide to switch, for example 1% of their bond holdings into equities. On June 9th the MSCI Inc. will make the decision on whether China’s shares can be included in the MSCI Index, if the decision is yes, literally billions of dollars will pour into the Chinese equity market – The MSCI Index is used as a common benchmark for 'world' or 'global' stock funds. If China becomes part of the MSCI Index, initially money is likely to flow into the China market from other equity markets as opposed to out of other asset classes. The Chinese equity market is already the second largest in the world worth over $9trillion.
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