MSCI China Index constituents added in August! What do they have in common?
According to the latest adjustment of the MSCI China Index in August 2025, 14 stocks were added and 17 stocks were removed.The adjustment will be implemented on August 26.
The 14 newly added stocks (5 A-shares and 9 H-shares) show significant commonalities in industry distribution, market performance, and company characteristics, mainly reflected in the following aspects:
1. Concentration in Technology Innovation and Biopharmaceuticals
Technology Sector: The newly added H-shares include GDS-SW (data center hosting), Horizon Robotics-W (AI hardware), NetEase Cloud Music (digital entertainment platform), and Meitu (imaging technology), representing cutting-edge technology directions. A-shares include Giant Network (game development), Compass (financial information services), and Jingwang Electronics (electronic circuit manufacturing); H-shares like CITIC Financial Assets (asset management) also belong to technology-intensive industries.
Innovative Drugs and Biotech: Biopharmaceutical companies such as 3SBio, Kelun-Biotech-B, WuXi XDC (H-shares), and Ailis (A-share targeted cancer drug R&D) were selected, reflecting international capital's focus on China's innovative drug sector.
Emerging Consumption: The inclusion of Lao Feng Xiang (high-end gold consumer brand) reflects new consumption trends.
2. Outstanding Market Cap and Liquidity
Large Market Cap: CITIC Bank (A-shares) has a total market cap exceeding $66 billion and was included in both the MSCI China Index and the Emerging Markets Index, highlighting its allocation value. The other 13 companies all have market caps above $6 billion, with four companies—CITIC Financial Assets, Horizon Robotics-W, Lao Feng Xiang, and Kelun-Biotech-B—having market caps above $10 billion. This shows that under MSCI's standardized quantitative screening, most selected companies have high market caps and stable growth.
High-Growth Stocks: For example, Giant Network (up 137% YTD) and Jingwang Electronics (up nearly 120%) demonstrate that the selected companies generally exhibit strong market performance and trading activity.
3. Alignment with Foreign Capital Preferences and Policy Direction
Over 70% of the newly added constituents are from the technology and biopharmaceutical sectors, consistent with foreign institutions' (e.g., Goldman Sachs, Morgan Stanley) recent overweight recommendations on China's AI, biotech, and other "new productive forces" sectors—"Goldman Sachs maintains an overweight rating and raised the MSCI China Index target to 84 points; Nomura upgraded its rating from neutral to tactical overweight, particularly bullish on AI, EVs, and robotics; Morgan Stanley noted improved profitability among Chinese tech companies, driving the MSCI China Index's ROE rebound from its 2023 low, with companies enhancing shareholder returns through dividends and buybacks." This reflects foreign capital's optimism about China's industrial trends and growing confidence in its stock market.
The adjustment reflects MSCI's quantitative screening criteria (free-float market cap, liquidity, investability for foreign investors), with selected companies meeting international capital's long-term allocation needs.
Holdings: On August 6, the Cayman Islands office increased its stake in 3SBio by 25,000 shares, bringing its ownership to 22.78%. On June 24, Baillie Gifford increased its stake in Horizon Robotics-W by 131,400 shares. From May 7 to May 26, GIC increased its stake in NetEase Cloud Music by 953,350 shares. From January 3 to April 7, Morgan Stanley increased its stake in WuXi XDC by 20,443,371 shares. From May 16 to August 6, Morgan Stanley continued to increase its stake in Meitu, reaching 233,274,560 shares. The increased stakes by multiple foreign institutions demonstrate the suitability of these newly added stocks for foreign demand.
4. Rising Proportion of H-Shares Reflects Sector Recovery
This time, 9 H-shares were selected (64% of the total), far exceeding the 5 A-shares, mainly due to the strong rebound of Hong Kong's tech and biotech sectors in 2025 (e.g., GDS-SW, 3SBio).
5. Long-Term Strategic Significance
After inclusion in the MSCI global index system, these companies will attract approximately $12.5 trillion in passive international capital, enhancing liquidity and global exposure.
Summary:
The commonalities of the newly added stocks can be summarized as "driven by tech innovation, biopharmaceutical R&D, high market cap, high growth, high liquidity, and favored by foreign capital", aligning closely with China's industrial upgrade trends and global capital's allocation demand for emerging growth sectors. Future attention should focus on the impact of passive fund inflows on the adjustment effective date of August 26.
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