A man walks past a stock index board in Beijing on Wednesday.

But for foreign investors to fully engage with Chinese stocks, there are still a lot of changes that need to happen. We expect a longer period for A-shares due to its size, access and capital mobility constraints, among others," said Bank of America Merrill Lynch in a report, adding that "fundamentals are far more influential" in attracting fund flows.

Jie Lu, head of China research at Dutch asset management firm Robeco, also believes full inclusion will take five to 10 years unless "reforms progress is faster than currently anticipated.

In its results announcements on Wednesday, the U. The mutual stock market access through the Stock Connects allows overseas investors to buy stocks listed on the mainland through the Hong Kong stock exchange and vice versa. It started in November in Shanghai, and extended to Shenzhen last December.

The infrastructure allows investors to trade stocks onshore without applying for a license and quota or being subject to capital mobility restrictions. The approval of A-shares on the emerging market benchmark following the apparent ease of trading seen in the the exchange links thus suggests that MSCI was not overly worried about the quality of the stocks. Brock Silvers, managing director at Shanghai-based investment advisory Kaiyuan Capital, told the Nikkei Asian Review that MSCI's decision "should be pleasing to China," but that it was "likely to deliver mixed results," citing corporate governance issues as a key concern alongside other technical problems.

China stock market | South China Morning Post

We see this in periodic crises uncovered by short-sellers closely following China's equity markets," said Silvers, adding that "significant fraud has been uncovered in a disturbing number of its listed companies in recent years.

Better disclosure practice is now topping investors' wish list of the potential changes the wider market will bring to mainland companies.

Highlighting the issue of variable information disclosure by dual-listed companies as a key concern, William Fong, investment director of Hong Kong China equities at U. It would be better if they could communicate their intentions more clearly," said Fong, adding that the introduction of more market-oriented elements would help increase the appeal of A-shares.

With a tendency to rein in market volatility, the Chinese regulator has relied on trading halts and set loose rules for the practice until recently. The number of trading suspensions in the China A-shares market thus remains by far the highest in the world.

–16 Chinese stock market turbulence - Wikipedia

More than half of the listed Chinese companies have suspended their own shares in the summer of against the backdrop of a massive stock rout. Julian Wee, National Australia Bank's senior markets strategist for Asia, suggested that the opening of the capital account would be of utmost importance for China A-shares to be popular in the long term.

She believed the initial inclusion "is very much still a medium term process," given that the Chinese authorities had indicated previously that they are targeting full liberalization of the capital account by around Although the application of the new weighting will be done gradually over a number of years, stocks listed in Taiwan and South Korea were sold down on speculation that liquidity will be diverted away from their stocks towards Chinese assets.

Asian flagship carriers sink as Chinese airlines expand. Vultures circle over Asia as corporate debt piles up. Philippines loses its shock absorber. Get off the 'Golden Route'.

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June 22, 1: Related stories Analysts worry A-share MSCI inclusion could hurt South Korean shares Hong Kong stocks slide as global cues outweigh MSCI nod for A-shares Fraser Howie: Bending of MSCI rules not a sign of China's progress China makes MSCI breakthrough with Stock Connect boost.

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