Our market will be lower today after another weak night offshore, especially in Europe and the US. But that’s not the big deal for global markets. Early Wednesday morning could see the investment landscape change dramatically.
But more of that shortly. Here, the local market will start down more than 20 points after a fall on the share price futures contract at the end of the long weekend.
Oil fell 1% after OPEC decided not to cut production, but gold edged up $US5 an ounce off shore to end around $US1,173 on Comex in New York.
Iron ore prices were unchanged at $US63.80 a tonne overnight, unchanged from its close last week.
On Wall Street, the Dow fell 82.91 points, or nearly 0.5%, to end at 17,766.55. The S&P 500 lost 13.55 points, or 0.65%, to 2,079.28 and the Nasdaq Composite dropped 46.83 points, or 0.9%
With the latest losses, the Dow is down 0.32% in 2015, while the S&P 500 is up a modest 1% and the Nasdaq is up 6.02%.
But investors are waiting bigger news than we saw overnight – around 7.30 am tomorrow, the influential index and research group, MSCI Inc will announce whether it will welcome China’s top yuan-denominated stocks into its influential Emerging Markets Index tracked by managers controlling an estimated $US1.7 trillion in assets worldwide.
A move like that would spark a renewed surge in the already pricey Shanghai exchange as big global investors were forced to buy Chinese shares to rebalance their portfolios. There has been sporadic buying ahead of the decision with US investment giant, Vanguard identified as one big buyer.
Marketwatch.com has pointed out that Hong Kong-listed shares of Chinese companies – known as “H-shares” – are already a big presence in the MSCI EM Index. Marketwatch says rival FTSE Group (owned by the London Stock Exchange) recently added the mainland-listed stocks – known as “A-shares” – into transitional global indexes, and may add them to its benchmark EM index this September, according to market analysts.
The possible MSCI move has been grabbing interest in China and around markets globally in recent weeks as the Chinese markets have soared and slumped in growing volatility. For that reason, and the fact that its still hard for foreign investors to enter the Chinese market (even with the stock connect process linking Shanghai and Hong Kong markets), many analysts outside China believe MSCI will wait. But it will happen eventually and it is a big deal.
