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China's A-shares are still not ready for prime time

HONG KONG For the third year in a row, benchmark provider MSCI refused to include China's domestic shares, or A-shares, in its Emerging Markets Index. The decision reflects foreign investors' anxieties about the far reach of the authorities in the equities market of the world's second-largest economy.

In MSCI's 2016 market classification review published in mid-June, existing hurdles clearly outweighed the progress made in improving the accessibility of the A-share market to foreign investors. Progress included the resolution of the issue around beneficial ownership, where the legal relationship between owners of the securities and asset managers is now clearly defined; enhanced regulations for trading suspensions; and changes to the Qualified Foreign Institutional Investor, or QFII, program, which aimed to ease restrictions on quota allocation and cross-border capital mobility.

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