MSCI stands for Morgan Stanley Capital International. The MSCI Global Index is a securities index compiled by Morgan Stanley Capital International. The index is an important reference for investors and fund managers. The index types include industries, countries, regions, etc., covering the world.

Morgan Stanley Capital International, also known as Morgan Stanley, is one of the three major index suppliers in the world. Many ETFs use indexes compiled by it. MSCI's main business is securities and investment management. Morgan Stanley refers to JP Morgan, which was a pure commercial bank in its early years. Later, as regulations were opened up, it also engaged in investment banking business.

What are the constituent stocks of the MSCI Global Index?

The MSCI Index basically includes large stocks, reflecting the stability of the index. The MSCI Global Index covers a total of 23 developed countries, covering a wide range. The top 10 holdings of the MSCI Global Index are all American companies, accounting for 17.85% of the index. Apple, Microsoft, Amazon, Nvidia, Google, Facebook, and ExxonMobil are all stocks included in it.

The stock industry distribution covered by the MSCI index is relatively even, with the largest proportion being: technology (22.32%), healthcare (13.59%), and finance (13.19%). In terms of country distribution, the countries invested in the MSCI Global Index are concentrated in the United States, accounting for as much as 67.74%

The difference between the MSCI Global Index and the S&P500 Index

The S&P 500 Index, or the Standard & Poor's 500 Index, is compiled by Standard & Poor's (S&P Dow Jones Indices). It mainly reflects the performance of 500 large listed companies in the US stock market and is one of the important indicators of the US stock market. The S&P 500 Index covers multiple industries and is the main benchmark index for the US stock market. In the MSCI Global Index, since 67% is the US market, this part is highly overlapped with the S&P500, and only the remaining 33% is different. The long-term trend of the MSCI Global Index and the S&P 500 Index is similar, but the performance of the MSCI Global Index is slightly worse, with a compound annual return rate of about 3.5% difference in the past 10 years. The volatility of the MSCI Global Index is slightly lower than that of the S&P 500 Index, but the difference is not large, with a standard deviation of only 0.14%.

• The MSCI Global Index covers the global market, while the S&P 500 Index mainly covers the US market.
• The MSCI Global Index includes large and medium-sized stocks in developed and emerging markets, while the S&P 500 Index mainly includes 500 large listed companies in the United States.
• The S&P 500 Index has a greater impact on the US stock market, while the MSCI Global Index has guiding significance for the asset allocation of global investors.

Major adjustment of the MSCI Global Index in August

On August 12, MSCI announced the results of the regular index adjustment in August each year. After the end of August 31, that is, starting in September, MSCI's flagship global stock index MSCI ACWI Index will include 27 stocks and remove 96 constituent stocks. Among the stocks included in the MSCI Global Index, the top three in terms of market capitalization are: Galderma Group, Zealand Pharma, and Addtech B.

Among them, Galderma, whose Chinese name is Gao Demei, was listed in Switzerland in March this year. It focuses on injection aesthetics, daily skin care and skin treatment, and is the parent company of the skin care brand Cetaphil; Zealand is a Danish weight loss drug company that has become famous this year for developing new drugs with great potential; Addtech is listed in Sweden and is a company that provides high-tech solutions in the fields of manufacturing and infrastructure.

The most deleted stocks in the MSCI Global Index this time are mainland Chinese stocks, with a total of 60 deleted and only 2 included in the index. Bloomberg said that before the 60 mainland Chinese stocks were deleted this time, 56 and 66 mainland Chinese stocks had been deleted in February and May this year respectively. In recent years, the MSCI index has been continuously excluding Chinese stocks, causing the proportion of the Chinese mainland market in the MSCI Emerging Markets Index to decline, while the proportion of the Indian and Taiwan markets has increased.

After the 60 Chinese stocks were removed this time, the proportion of Chinese stocks in the MSCI Emerging Markets Index, including red chips, H shares, N shares (listed in the United States) and A shares, will inevitably be closer to the proportion of Indian and Taiwan stocks. The 60 Chinese stocks that were eliminated this time include 56 A shares and 4 H shares. The 4 H shares are China Duty Free Group (1880), Fulait Glass (6865), Ganfeng Lithium (1772) and GF Securities (1776).

According to Bloomberg data, the two stocks newly included in the MSCI China Index are Huaneng Lancangjiang Hydropower (Shanghai: 600025) and Shenghong Technology (Shenzhen: 300476). In addition, the MSCI Hong Kong Index only removed Dagu Real Estate (1972), and no new stocks were included in the index. According to Bloomberg data, the share of the Chinese market in the MSCI Emerging Markets Index fell from 32.1% in July 2021 to 22.33% last month. Compared with the peak of 40% in 2020, it has fallen by nearly 18 percentage points. At the same time, the share of India and Taiwan has risen from 10.8% and 14.4% three years ago to 19.99% and 18.39%, respectively.

How to invest and trade on uSMART:

After logging in to the uSMART SG APP, click "Search" from the top right of the page, enter the target code, such as "MSCI", select the ETF of interest, enter the details page to learn about the transaction details and historical trends, click "Trade" in the lower right corner, select the "Buy/Sell" function, and finally fill in the transaction conditions and submit the order; the picture operation instructions are as follows:

Source：uSMART SG

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