China shares get MSCI nod in landmark moment for Beijing on road to global acceptance

China's stocks took a major step towards global acceptance on June 21, finally winning a long campaign for inclusion in a leading emerging markets benchmark, in what was seen as a milestone for global investing.

U.S. index provider MSCI said on June 21 Hong Kong time it would add a selection of China's so-called "A" shares to its Emerging Markets Index after having rejected them for three years running.

In the broader overhaul, MSCI surprised many investors by failing to upgrade Argentina from the frontier market category where it has languished in recent years, but said it would consult investors about adding Saudi Arabia to the benchmark.

Inclusion in the index marks a key victory for the Chinese government, which has been working steadily over the past few years to open up its capital markets, investors said.

"Given the size and importance of China as an economic superpower, I think this is a historic moment," Kevin Anderson, senior managing director of State Street Global Advisors and head of investments in the Asia Pacific region told Reuters.

"It's a long-awaited and much-debated decision in the past, and I think it's more than symbolic as it will create additional flow of capital and potentially a new segment of institutional investors in the China market."

Traders said MSCI's widely expected "Yes" decision had been largely priced in, with the announcement triggering some profit-taking in blue chips, which are no longer cheap after strong rallies this year.

Shanghai shares opened just 0.3 percent higher, dipped into negative territory, and then rallied to end the day up 0.5 percent. The blue-chip CSI300 Index shook off early profit taking to finish up 1.2 percent at its highest close in 1-1/2 years...