On February 10th, Mingsheng Company (MSCI) announced the results of quarterly review of the changes.

The MSCI Index is the most influential index series in the world, including equity, fixed assets, hedge funds and stock markets. At present, there are more than 1000 ETF funds with more than 10 trillion US dollars in assets in the world, based on the MSCI index.

In MSCI's series of indices, A-shares include the MSCI China Index, the MSCI China A-share onshore Index and the MSCI China all-share Index. Of the three MSCI indices, the most noteworthy is the MSCI China index.

Specifically, the MSCI China Index has added 12 Chinese stocks this time, excluding 6.

From the perspective of the industry to which the stock belongs, the biomedical enterprises have received more attention in this adjustment. Among them, Kangfang Bio is an innovative pharmaceutical enterprise that has set a record of domestic innovative drugs "going out to sea". Antu Biology focuses on the research and development of in vitro diagnostic reagents and instruments, while Plum Blossom Biology is a large industrial group mainly engaged in biological fermentation, mainly in the areas of amino acids and condiments.

At the same time, three new energy industry chain enterprises have also been newly included, including long-term Lithium, one of the main suppliers of power battery ternary cathode materials, upstream photovoltaic supply quartz shares and photovoltaic leader Oriental Sunrise. Among them, Dongfang Risheng's share price has risen more than 31% since the beginning of this year.

In addition, Zhonggong Education, State Investment Capital, Aixu shares and Wanda Film have also been newly included. In terms of China-listed stocks, the newly included stocks include MINISO Group (MNSO) and RLX Technology Inc..

In addition to newly included stocks, the MSCI China Index excluded six Chinese stocks this time, namely, Bizhui, Xiexin Integration, Haichang Ocean Park, Huagong Science and Technology, Oufeiguang and Xinjiang Goldwind Science & Technology.

MSCI A-share onshore indexTen constituent stocks were added, including Lanzhou Bank, HNA Holdings, Hainan Airport, Dinglong shares, Xusheng Group, Zhonggong Education, Ruixin Micro, International Medicine, Shaanxi Drum Power, Zhongtai Automobile, and five constituent stocks were removed. Including Haixin Nengke, Huaxia Happiness, Jinke shares, Yulong shares, Sinotrans.

MSCI China all-Stock IndexSeven new constituent stocks were included, including Kangfang Biology, HNA Holdings, Hainan Airport, MINISO Group, Zhonggong Education, Oriental Sunrise and RLX Technology Inc., while eight constituent stocks were excluded. Including Bishui, Guanghui Automobile, Xiexin Integration, Haichang Ocean Park, Huagong Technology, Tiannai Technology, Oufeiguang, Xinjiang Goldwind Science & Technology.

It is worth noting that in addition to the MSCI China A-share Index, the list of constituent stocks of the MSCI China all-share Index and the MSCI China A-share onshore Index have also been adjusted, but due to the relatively small amount of overseas funds tracking the above two indices, the adjustment may not lead to significant capital inflows and flows.

Because the MSCI China Index is embedded in the MSCI emerging Markets Index, the inclusion of stocks in the MSCI China Index means entering the MSCI global standard index series, resulting in a large number of passive capital tracking.

The index compiled by MSCI is equivalent to selecting stocks for large institutions, and once stocks are "bought", they may be bought by global institutions, which is of great significance to the capital markets.

There are currently 16 ETF tracking MSCI series indexes on the market.

One of the more popular is the MSCI China A-share International Real time Index, which is tracked by 6 ETF. The stocks included in the index are all Chinese A-share stocks in the MSCI China Index.

The adjustment of the MSCI index will take effect after the close at the end of February. Therefore, the MSCI China Index is newly included in individual stocks, or will usher in overseas passive index funds card point to buy at the end of the day. In addition, with the index adjustment, fund products that follow these indices will also be passively adjusted, and related stocks may have "abnormal" magnification of trading volume and volatility.

The adjustment of MSCI index, in principle, selects stocks according to liquidity, company market value, industry representation and other factors, among which liquidity is the most concerned index of MSCI. Usually, MSCI chooses stocks with good performance and good performance, while excluding its constituent stocks is due to four main reasons: substandard performance, high debt ratio, poor liquidity and touching the upper limit of foreign ownership.

So what is the specific impact after the index adjustment?

For the newly included companies, on the one hand, it shows that their market capitalization and various operating indicators have been affirmed by MSCI, which will attract the attention of investors to a certain extent. On the other hand, some index funds that track MSCI correspond to buying new entrants to the index. This brings incremental funds to the selected companies, which is good in the short term and depends on the performance of the company in the long run.

With the changes in the constituent stocks of the above-mentioned important indexes, the relevant index funds will also be adjusted, and the newly included enterprises will get more capital allocation, while the excluded enterprises will be passively sold by the relevant index funds. However, the actual changes in stock prices may not be consistent with the direction of weight adjustment, and there is no lack of new or increased weight stocks falling on the day of adjustment.