China A-shares: traders want access to onshore funding

Inclusion in MSCI will drive CNH squeeze unless CNY market is opened or settlement extended

Boat outside Hong Kong

Offshore renminbi funding costs are likely to rise following the addition of Chinese mainland shares in two MSCI benchmarks on May 31. In an effort to ease growing pressure on the currency and stem a pending liquidity crunch, global dealers are calling for access to onshore funding and an extension of the same-day settlement horizon on Stock Connect equity trades.

As much as $17 billion could flow into onshore Chinese markets once MSCI includes 234 stocks from mainland China – known as A-shares

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