# **Appendix Table 3. The MSCI Incorporation Processs**

urces: Index announcements, MSCI.

|Year|Review Details|
|---|---|
|2013|MSCI first announced a review process for the inclusion of China A shares into the MSCI Emerging Market index in the MSCI Annu<br>Classification Review of 2013. It was established that the speed and magnitude of the inclusion would depend on the actual progress in the o<br>the Chinese equitymarket.|
|2014|First consultation for the inclusion of China A shares into the MSCI Emerging Market index (MSCI Annual Market Classification Review<br>The inclusion was refused.<br>International investors highlighted investabilityconstraints linked to theQFII and RQFII.|
|2015|Second consultation for the MSCI inclusion of China A shares (MSCI Annual Market Classification Review of 2015). The inclusion was refu<br>International investors highlighted issues related to the quota allocation process, capital mobility restrictions, and beneficial ownership. The<br>the Stock Connect program to Shanghai plus the imminent extension to Shenzhen, the expansion of the RQFII program, and other imp<br>were recognized. MSCI announced the collaboration with the CSRC to lead the implementation of policies that would effectively r<br>remaining accessibility issues in the China A share market.|
|2016|Third consultation for the MSCI inclusion of China A shares (MSCI Annual Market Classification Review of 2016). The inclusion was refus<br>International investors needed time to evaluate policy changes. Other issues remarked were suspensions of trading and pre-approval req<br>imposed by the local Chinese stock exchanges.|
|2017|Fourth consultation for the MSCI inclusion of China A shares (MSCI Annual Market Classification Review of 2017). The inclusion was app<br>The positive impact on the accessibility of the China A share market of the Stock Connect program and the loosening by the local Chi<br>exchanges of pre-approval requirements was highlighted by the international investors consulted.<br>It was announced that the inclusion of A shares with an inclusion factor of 5 percent would be implemented in two steps of 2.5 percent<br>and August 2018). The original proposal includes all China A Large Cap shares accessible through the Stock Connect program. The future a<br>China A Mid cap shares was announced.|
|2018|The inclusion of A shares was successfully implemented and a new consultation on a further weight increase of China A shares in the MSC<br>was launched. MSCI proposed:<br>- Increase the inclusion factor of China Large Cap A shares from 5 to 20 percent in two phases.<br>- Add Mid Cap A shares with a 20 percent inclusion factor.<br>- Add the ChiNext board of the Shenzhen Stock Exchange to the list of eligible stock exchange segments.|
|2019|The 2018 consultation was confirmed and implemented. However, there were some modifications to the original proposal. The imple<br>process consisted of three steps.<br>- In the Semi-Annual Index Review of May MSCI increased the inclusion factor of Large Cap A shares in the MSCI Indexes from 5 to 10 p<br>added ChiNext Large Cap shares with a 10 percent inclusion factor.<br>- In the Quarterly Index Review of August MSCI increased the inclusion factor of Large Cap A shares in the MSCI Indexes from 10 to 15 p<br>- In the Semi-Annual Index Review of November MSCI increased the inclusion factor of A Large Cap A shares in the MSCI Indexes from<br>percent and added China A Mid Cap shares with a 20 percent inclusion factor.|