If you’re a betting man, the probability of China joining the MSCI Emerging Markets Index just got better.

Goldman Sachs, which has many similarities to a bookie, on Tuesday increased the odds in China’s favor saying that there’s a 70% chance that MSCI will include shares from China’s mainland stock market in its benchmark for equities in emerging markets.

Goldman’s decision was based on Beijing’s recent moves to eliminate obstacles for global money managers wanting to invest in China. The US investment bank pointed to measures taken by authorities with respect to beneficial ownership of shares and clarifying guidelines on stock suspensions.

Last summer, partly in anticipation of being included in the index, the Chinese stock markets surged more than 150%. When MSCI announced it would not include China in its index, the nonevent helped the mainland market to plunge in value.

Since then, China has addressed many of MSCI’s concerns by relaxing its $81 billion Qualified Foreign Institutional Investor (QFII) scheme, a quota-based foreign investment scheme, and clarifying foreign ownership rights, prompting MSCI to reconsider inclusion of “A” shares.

The New York index company will release its decision on June 14.

However, Reuters said that including “A” shares in the global benchmark is unlikely to trigger an avalanche of capital flows into China. Although about $1.5 trillion of assets track the index world-wide, Reuters said even a 5% weighting in the MSCI indexes will roughly translate into a net $15 billion in inflows into “A” shares, tiny in comparison to daily turnover or size.
On Tuesday, the Shanghai Stock Exchange Composite Index jumped 3.3% to 2,917.

Even after Tuesday’s bounce, Chinese stocks are the worst performing in Asia so far this year with the Shanghai stock market down a fifth, while the Hong Kong index is down 5%, according to Thomson Reuters data.

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