China faces another roadblock to the complete inclusion of its stocks in global benchmarks. The country is currently looking to implement strict measures to control its capital flow. These measures have become cause of concern for a MSCI, a top index provider.

China is looking to curb the capital flow out of the country. These steps are being taken to halt the decline in yuan value. The currency saw major decline in its value vis a vis dollar in 2016. The slide continues into the current year as well. Chinese authorities have tightened the regulations over individuals and corporations making outward remittance.

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MSCI had signaled its interest in including onshore Chinese stocks into its MSCI Emerging Markets Index. The move would have led to healthy flow of funds into the Chinese markets as inclusion into such an index rests favorably with asset managers, insurers and pension funds.

However, MSCI is now wary of making any such move. MSCI Chairman and Chief Executive Henry Fernandez told Reuters, "If they reverse course and they restrict the 'out' door, then how can we? It's going to be hard for the MSCI to put the A shares into the index because we will not be doing a good service to our clients."

The company CEO further said that China has taken a lot of progressive steps including the linking of Shanghai and Hong Kong international market to Shenzhen exchange. The new negotiations for the inclusion of Chinese A stock into the index are likely to start later this month. 

TagsMSCI, Shenzhen Exchange, Chinese Stock Class A