As major policies by the CPC Central Committee and the State Council of China on promoting a new landscape for full openness are implemented stably, China’s financial market opens more toward the world. Recently, Dongfang Precision Group has received good news.
Bell Rings to Celebrate the Official Inclusion of China A Shares in the FTSE Global Equity Index
On September 8, 2019, the international renowned S&P Dow Jones Indices announced the inclusion of 1,099 China A shares to the S&P Emerging BMI, which became effective on the opening of September 23. The stock of Dongfang Precision (stock code: 002611; stock short name: Dongfang Precision) was on the inclusion list. In June 2019,1,000 China A shares were included in the FTSE Global Equity Index Series, with Dongfang Precision Group’s stock on the inclusion list.
Partial List of A Shares Made on the First Batch of the List of Shares Incorporated into the FTSE Russell
Partial list of A stocks included in the S&P Dow Jones
Since June 2018, three major international indexes (MSCI, FTSE Russell, S&P Dow Jones) began to include China A Shares into their major index series, and have already increased, or plan to increase the inclusion factor of these A Shares. The three international indexes, MSCI, FTSE Russell, S&P Dow Jones serve as stock market benchmark for performance comparison of foreign-invested funds. With the move of inclusion of China A Shares and the increase in inclusion factors, foreign institution will correspondingly increase the proportion of A shares in their portfolio. According to relevant estimation, the inclusion of China A Shares and the gradual increase in inclusion factors will bring in hundreds of billions of passive allocation capital from overseas institutions.
According to relevant information, the global index giants FTSE Russell and S&P Dow Jones have certain requirements on free-flow market cap and liquidity (such as turnover ratio, days for trading and number of days of suspension) when selecting shares to be included into their indexes. The inclusion of Dongfang Precision into the two international indexes fully demonstrates the recognition of certain indicators of the company by international institutions.
At the same time, trading under the interconnection mechanism (Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect) is taken as the basic standards for including stocks into the three international indexes. The stock was a trading object under the Shenzhen-Hong Kong Stock Connect, as released by the Stock Exchange of Hong Kong. In August 2019, the stock became a qualified object in under the Shenzhen-Hong Kong Stock Connect supporting margin trading (similar to securities margin trading of A Shares).
According to WIND's statistical data, since 2019, the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect under the interconnection mechanism have basically maintained a significant net capital inflow. Up to now, the foreign capital flow from the channel of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect has exceed CNY 100 billion.
Against the backdrop of further opening of China’s finance market to the global world, the inclusion of the stock into the FTSE Russell and S&P Dow Jones shows an improved recognition of the company stock’s value for investment by global investors. It can also help further optimize investor structure and improve the company stock's liquidity.
When the gradual inclusion and expansion of China A Shares into the three international major indexes continuing to develop, when the institutional investors of China A shares go global, they will raise higher requirements for A-share listed companies in terms of governance, compliance, relation with investors, social responsibility, etc.
Sticking to its globalization strategy, Dongfang Precision Group, with its stock being included into the two international major indexes, is committed to improving and strengthening its exchange and communication with international institutional investors, delivering a clearer image of the company’s operation condition to global investors, and increasing awareness of the return of investment to the company. Meanwhile, it will persistently improve its capacity in governance, compliance and operation, to create values for investors at home and abroad.