Consultation on Proposed
Methodology Enhancement for
China P-Chip Classification
August 2020

© 2020 MSCI Inc. All rights reserved.
Please refer to the disclaimer at the end of this document.

Background➢ In order to enhance the country classification framework in the MSCI Global Investable
Market Indexes methodology, MSCI proposes to use company headquarters as acondition to classify China P-Chip companies instead of the current nationality criteria andrevise current revenue and non-current assets thresholds based on the location ofheadquarters.

➢ Currently, to be classified as a China P-Chip, a company should satisfy at least two out of
three of the following conditions:▪ Mainland China individuals comprise its largest shareholding▪ It derives more than 80% of its revenue from Mainland China (70% for existingconstituents)▪ It allocates more than 60% of its non-current assets in Mainland China (50% forexisting constituents)➢ MSCI welcomes feedback until September 18, 2020. MSCI will communicate the results ofthe consultation on or before September 25, 2020.

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Proposal➢ MSCI proposes to apply the following conditions for the classification of companies
as China P-chip:▪ For a company with headquarters in Mainland China –▪ It derives more than 50% of its revenue from Mainland China (40% forexisting constituents) or▪ It allocates more than 50% of its non-current assets in Mainland China(40% for existing constituents)▪ For a company with headquarters in Hong Kong, Macau or elsewhere –▪ It derives more than 80% of its revenue from Mainland China (70% forexisting constituents) and▪ It allocates more than 60% of its non-current assets in Mainland China(50% for existing constituents)

3Discussion Points➢ Do you agree with the proposal to use company headquarters as a condition insteadof nationality for the classification of companies as China P-Chip? If not, why?

➢ Do you agree with the proposed thresholds for companies with headquarters inMainland China? Please provide further comments/feedback to your response.

➢ Do you agree with the proposed thresholds for companies with headquarters in Hong
Kong, Macau or elsewhere? Please provide further comments/feedback to yourresponse.

➢ Do you have any further comments/feedback on this topic?

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Simulated Impact (1/2)
List of companies* reclassified to Hong Kong based on proposed conditions from November
2019 SAIRMSCI
CodeRIC

Security Name

94102.01

0612.HK

China Ding Yi Feng (Cn)36669.01

2678.HK

Texhong Textile Group

91338.01

0799.HKIgg (Cn)

70771.01

8137.HK

Honbridge (Cn)

76458.01

0108.HK

Gr Properties (Cn)76457.01

0106.HK

Landsea Green Properties

76463.01

0607.HK

Fullshare Holdings (Cn)96910.010185.HK

Zensun Enterprises (Cn)64031.01

1004.HK

China Smarter Energy Grp

91343.01

0439.HK

Kuangchi Science (Cn)62872.010030.HK

Ban Loong Holdings

CurrentClassification

Potential
classification

CNHK

CNHK

CNHK

CNHK

CNHK

CNHK

CNHK

CNHK

CNHK

CN

HK

CNHK

*Includes companies with full market capitalizations above Equity Universe Minimum Size Requirement(USD 233 million) from November 2019 SAIR

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Simulated Impact (2/2)
List of companies* reclassified to China P-Chip based on proposed conditions from November
2019 SAIR
MSCI
Code

RIC

Security Name

94110.01

0425.HK

Minth Group (Hk)80426.01

1717.HK

Ausnutria Dairy (Hk)

96901.01

1383.HK

Suncity Group Hldgs (Hk)91344.010853.HK

Microport Sci (Hk)

98386.01

2616.HK

Cstone Pharmaceuticals

98865.01

1873.HK

Viva Biotech Holdings

33611.01

2038.HK

Fih Mobile

97517.01

2552.HK

Hua Medicine

99124.01

0468.HK

Greatview Aseptic (Hk)96908.01

0877.HKO Net Technologies (Hk)74044.01

2283.HK

Tk Group Holdings

94798.01

1651.HK

Precision Tsugami China

Current
Classification

Potentialclassification

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

HK

CN

*Includes companies with full market capitalizations above Equity Universe Minimum Size Requirement(USD 233 million) from November 2019 SAIR

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requests that its feedback be disclosed. In that case, the relevant feedback would be published at the same time as the final results of theconsultation.

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