Sjuggerud: What you need to know about today’s historic announcement
UPDATE: This essay was written before the MSCI announcement at 4:30 p.m. ET on Tuesday. But we just confirmed that Steve’s prediction below was exactly right (again). Read on to learn how this decision will affect you… and why Steve feels everyone should own some of these stocks.
From Dr. Steve Sjuggerud, Editor, True Wealth:
Today is one of the most important days in the history of investing…
This single day could force big investors to make huge changes to their investments. And it’s just the beginning…
This afternoon, MSCI – the leader in global stock market indexes – will announce the results of its annual meeting. MSCI holds this meeting to decide on any changes to its index weightings.
Normally, nobody cares… But this time around, the changes should be historic. And they will likely affect you…
I predict – for the first time in history – MSCI will finally include Chinese A-shares in its global indexes.
This is a big change. And it likely affects you, even if you don’t realize it. You are about to start owning local Chinese stocks in your pension fund – for the first time ever.
You see, right now, roughly zero percent of American retirement assets are invested in local Chinese A-shares. But that will all change when MSCI includes local Chinese stocks in its indexes.
Here’s what I mean…
Right now, 94% of U.S. pension funds that are invested in global stocks are benchmarked to MSCI’s indexes. So if you’re a teacher, a firefighter, or anyone else with a decent pension fund, you will unknowingly start owning local Chinese stocks for the first time… very soon.
Today’s announcement from MSCI could trigger a massive change in global finance.
But it won’t happen overnight.
Today’s announcement is the first step of a massive shift into Chinese stocks.
It’s the first roll of the small snowball down the hill.
To me, this decision by MSCI is a “no brainer”…
China is the world’s second-largest economy and second-largest stock market. Yet China’s local stock market is completely left out of MSCI’s emerging market index.
This is a financial wrong that must be righted.
It makes no sense for the stock market in the world’s largest emerging market to have a zero-percent weighting in the world’s biggest emerging market index!
Of course, MSCI had its reasons for not including China. It has been difficult historically for investors to move money in and out of China. But that has gotten easier in recent years.
In short, MSCI put up several roadblocks for inclusion over the past few years… And China has checked all of the boxes. It has made it past the roadblocks.
That’s why I expect MSCI to announce a plan to include Chinese stocks this afternoon, shortly after 4:30 p.m. Eastern time.
Normally, decisions about changes in indexes are boring and irrelevant. But today’s announcement is different… Today’s announcement – and the changes it causes – will ultimately have a dramatic effect on your money as U.S. investors start piling into Chinese stocks.
My advice all along was to get your money ahead of this decision. I said to buy China before the MSCI announcement… before the rest of the world wakes up to what I see.
The day of reckoning is here. And my advice remains the same: Own Chinese stocks.