Zhitong Finance App learned that on May 15, the international index compiling company MSCI announced its quarterly index adjustment results for May 2024. The adjustment results will take effect after closing on May 31, 2024. In this adjustment, 10 new constituent stocks were added to the MSCI China Index. Hong Kong stocks included Hisense Home Appliances (00921) and Minmetals Resources (01208), and 8 A-shares included Wanfeng Aowei (002085.SZ) and Jin Chengxin (603979.SH). At the same time, 56 constituent stocks including Binjiang Group (002244.SZ) were excluded.

Specifically, a total of 10 new constituent stocks have been added to the MSCI China Index, including two Hong Kong stocks, Hisense Home Appliances (00921) and Minmetals Resources (01208), as well as 8 A shares of CITIC Special Steel, Hisense Home Appliance A, Wanfeng Aowei, Jinchengxin, Pingmei, Nangang Steel, Tiandi Technology, and CNOOC Development.

Meanwhile, the MSCI China Index excludes 56 constituent stocks, including 15 Hong Kong stocks including Jiantao Group, China Cinda, Sany International, Air China, CNOOC Properties, Dongfeng Group, and COSCO SHIPPING Ports. In addition, 41 A shares were excluded, including Mingyang Intelligence, Binjiang Group, Xincheng Holdings, Jiejia Weichuang, Junshi Bio-U, Yonghui Supermarkets, Jianyou Shares, OCT A, Bairun Shares, Greenland Holdings, Yirui Technology, Hemai, and VeriSilicon.

CICC pointed out that capital flows are upward. Judging from the historical experience of index adjustments, in order to reduce tracking errors in the index as much as possible, passive funds usually choose to adjust positions on the last day, which is May 31, so they often see an “abnormal” increase in individual stock transactions with large weight changes, especially at the end of the session. In contrast, active funds do not have this restriction; they can take the opportunity to choose when to allocate them. The bank recommended focusing on the potential impact of some individual stocks with poor liquidity.

In terms of the impact on stock prices, after the results are announced but before the official implementation date, some arbitrage funds will also lay out corresponding individual stocks based on the official results, especially those unexpected results that were not fully predicted by the market before. However, it should be noted that although passive funds “must” adjust positions according to weight changes on the official implementation date of the adjustment, actual changes in stock prices during this period are not necessarily in line with the direction of weight adjustments. Instead, they will be more affected by the comparison of strength and weakness between early arbitrage funds and passive funds. Previously, there was no shortage of cases where the stock prices of newly included or weighted stocks fell on the day the adjustment was implemented.