MSCI Emerging Market Index Increases India Weighting

Effective May 27, 2010, index builder MSCI Barra is increasing India’s equity weighting in its Emerging Markets Index from 7.7% to 7.9%.  While the move is not significant in terms of the weighting change, it will result in more capital inflows and higher profile.

See Business Standard India Gains Weight on MSCI Emerging Markets Index.

India’s weighting would be higher except for foreign investment ownership limits in some industry sectors.  The Indian authorities won’t remove these caps lightly, but they have made changes from time to time over the past few years.  However, look for India’s weighting to continue to move up with continued economic and equity market growth (because India is outpacing all but China).

May 27, 2010 change in weighting was prompted by MSCI Barro’s shift of Israel to developed country status, after having put it on watch last year for such a move.  South Korea and Taiwan remain on watch to also be upgraded, which if it happens will result in another reweighting of the MSCI Emerging Markets Index in favor of India (as well as China and other components of the index).

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