MSCI China A50 Interconnection Index is compiled by MSCI. MSCI is a supplier of stocks, fixed assets, hedge funds and stock market indexes, and it compiles various indexes. Morgan Stanley Capital International Index is the most used benchmark index by portfolio managers around the world. Since China A-shares were first included in MSCI Emerging Markets Index in 20 18, the weight of China in MSCI Emerging Markets Index rose from 18% at the end of 2009 to 34% in August 200219, and China stock market attracted more and more international investors. MSCI China A50 Interconnection Index selects 50 stocks with the largest market value that can be traded in Shanghai-Shenzhen-Hong Kong Stock Connect, so as to ensure the scattered plate allocation and represent the vast China A-share market in a balanced way.

Composition of MSCI China A50 Interconnection Index

First, select the two largest securities from the 1 1 GICS plate-the selection is based on the corresponding weights of the securities in the Morgan Stanley Capital International China A-share Index. If the securities of certain industry sectors are not selected according to the above rules, the securities with the largest freely circulating adjusted market value in these industries will be included in the alternative pool. Note: 1 1 GICS industry sectors include: basic materials, consumer non-necessities, consumer daily necessities, energy, finance, health care, industry, information technology, telecommunications services, public utilities and real estate. Then the securities with the largest market value after free floating adjustment in MSCI China A-share index are included in the index until the number of securities reaches the target number of constituent stocks (50).

After the index constituent stocks are determined, the weights shall be distributed according to the adjusted market value ratio of the constituent stocks. Then when the weights are rebalanced, the weight of each industry sector in MSCI China A50 Interconnection Index is equal to its weight in MSCI China A-share Index.