MSCI exclusion: a hidden blessing

MSCI, one of the world's most-followed index providers, has spoken up for the global investment community by keeping China’s A shares out at its annual review.

Quite simply, it is too soon for China’s domestic stock markets because their regulatory environment and levels of corporate governance still fall short of the standards required for them to enter the global investment mainstream.

Last summer, China’s market regulators approved mass trading suspensions to control extremely volatile retail investor-driven stock markets. And they may yet do so again, which poses an intolerable liquidity risk for the many global investors who track MSCI’s indices with their...