July 9, 2020
Who is regulating the index or benchmark providers? The composition of the Emerging Markets benchmark by MSCI for instance, largely considers quantitative factors such as market cap size, liquidity, breath of the market, but no corporate governance, or any real fundamental attributes. This particular benchmark has an oversized presence of a few Chinese new economy companies listed as US ADRs. Thus, as one of your panelists suggested, it creates an oversized demand for their shares, given the ample liquidity currently in the economy. This benchmark no longer represents an EM benchmark, but more a China plus index.