The new index, after implementation of the second phase on 30 May 2002, is estimated by many market analysts and commentators to deliver a net inflow into Australian markets of up to A$5 billion as global fund managers adjust their portfolio weightings.
ASX managing director and CEO, Mr Richard Humphry, said the reweighting reflected the relative efficiency and vigour of global capital markets, and would benefit Australian companies and investors by improving the depth and liquidity of the Australian market.
"The MSCI is an important factor for global fund managers in compiling their portfolios. Those investments are increasingly spread across borders as a result of both improved awareness of other markets and greater efficiency of capital movement. Any investor seeking regional exposure will need to increase their weighting in Australian companies to match the adjusted index," he said.
For example, Australia's weighting in the MSCI Asia Pacific (ex Japan) index has increased from 28.13% to 39.18%. MSCI estimates that about US$3 trillion is benchmarked against MSCI indices, and up to $500 billion directly indexed.
"These reweightings, including the second tranche of next May, are particularly welcome in that they follow a year in which the Australian market as a whole has outperformed all other exchanges worldwide," Mr Humphry said.
ASX has already advised market participants that the MSCI rebalance could result in a significant increase in trading volumes in some securities, and that some price movements could result from these, and from the increased volatility in the market generally.
