Will China finally turn respectable?

Index provider MSCI's admittance of China's domestic stockmarket into its emerging-market indices would be a small but symbolic move.

Index provider MSCI isabout to announce whetherit will admit China'sdomestic stockmarketto its emerging-marketindices. Entry would be "asmall but symbolic move",says Marion Dakers in TheSunday Telegraph.

TheMSCI isn't contemplatingputting the entire A-sharesmarket in its indices yet;for now, it is concentratingon 5% of it. China's overallweighting would therebyonly rise from 25.9% to27.3% in the EmergingMarkets index (Hong Kongand US Chinese companylistings already providesome access). Another$21bn or so of foreignmoney would then comeinto the country, accordingto Axa Investments.

Capital controls, ownershiprestrictions and theregulators' ham-fistedperformance amidlast summer's marketmeltdown all suggestthat the A-shares marketis still more of a localcasino than a fully fledgedinternational stockmarket.But the government hasbeen making an effort toderegulate and reduce interference. If MSCI givesChina a green light, itwould provide confirmationthat "this is an importantmarket that is graduallyliberalising", says UBS.

Zinc bucks the metals trend

Stockpiles in warehouses tracked by the London Metals Exchange have slid by 18% this year to a seven-year low. The global supply deficit is set to triple by 2017. Meanwhile, China's infrastructure spending is accelerating at its fastest pace since 2009, adds Goldman; Chinese infrastructure and property markets are key sources of demand. Zinc has further to go.

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