China blue-chips hit 18-mth high on MSCI inclusion hopes; HK also up

* SSEC 0.6 pct, CSI300 1.0 pct, HSI 0.4 pct

* Blue-chip index at record high since 2016

* MSCI to raise weighting of China A-shares

SHANGHAI, June 26 (Reuters) – China stocks rose on Monday
morning, led by the blue-chip index advancing to a record high
since 2016, after the MSCI chief said the index provider could
raise its weighting of China A-shares.

The Shanghai SE 50 Index, an index tracking the 50
most representative blue-chips in the Shanghai Stock Exchange,
moved up 0.5 percent to an 18-month high. The index has gained
11.2 percent in 2017, versus a gain of 2.4 percent in the
benchmark SSEC.

The CSI300 index rose 1.0 percent, to 3,658.73
points at the end of the morning session, while the Shanghai
Composite Index gained 0.6 percent, to 3,178.15 points.

U.S. index provider MSCI Inc Chief Executive Henry
Fernandez said that in the future the MSCI Emerging Markets
Index could raise its weighting of China A-shares, potentially
adding 195 mid-sized stocks, Shanghai Securities news reported.

MSCI’s decision to add 222 China-listed large-cap stocks to
its Emerging Markets Index (EMI), tracked by around $1.6
trillion, has already fuelled a buying spree for blue-chips on
the mainland.

The decision is widely expected to bode well for the
long-term development of A-share market.

“For now we are optimistic about the (A-share) market, which
has been picking up recently, aided by better policy and
liquidity conditions,” Haitong Securities wrote in a report.

Listed companies in the A-share market are also expected to
record rapid profit growth in the second quarter and for the
full year, the brokerage added.

Sectors rallied across the board in the morning. the top
performing real estate sector jumped 3.1 percent to
a six-month high, led by bellwether China Vanke
which surged 6.4 percent after a 10 percent gain the previous
session.

The CSI300 bank index gained 0.6 percent, after
the nation’s top banking regulator told banks to push forward
with reform.

The market showed scant reaction to news that China meted
out a nearly 700 million yuan ($102.33 million) punishment to a
Russian-controlled high-frequency trading firm for futures
market manipulation on Friday.

Hong Kong stocks followed other Asian markets higher on
optimism about global growth.

The Hang Seng index added 0.4 percent, to 25,768.13
points.

The Hong Kong China Enterprises Index gained 0.5
percent, to 10,485.29.
($1 = 6.8405 Chinese yuan renminbi)

(Reporting by Luoyan Liu and John Ruwitch; Editing by Simon
Cameron-Moore)


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