MSCI INDEX (Syllabus: GS Paper 3 - Economy)

News-CRUX-10     8th August 2023        
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Context: India may be on the path to recapturing the second spot on the MSCI Emerging Markets (EM) Index from Taiwan if the current trend persists.

  • Following the rebound in domestic equities from the year's low late in March, the weight of Indian stocks in the MSCI EM index has risen from 12.97% at the end of January to 14.21% currently, the highest rise among peers in the basket.

MSCI Index

  • About: The MSCI World is a stock market index of 1,643 world’ stocks. 
  • It is maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is used as a common benchmark for ‘world’ or ‘global’ stock funds.
    • The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI. 
    • The index includes securities from 23 countries but excludes stocks from emerging and frontier economies making it less worldwide than the name suggests. 
    • A related index, the MSCI All Country World Index (ACWI), incorporated both developed and emerging countries. 
    • MSCI also produces a Frontier Markets index, including another 31 markets.
  • MSCI Index India: As per the official definition, the MSCI Index India is used to evaluate the performance of large and mid-cap segments of the Indian market. 
    • MSCI Global Investable Indexes (GIMI) Methodology is used for MSCI Index India.
    • Around 85 percent of the Indian equity universe is covered by the MSCI Index India.
    • There are four constituents: Largest, Smallest, Average and Median.
  • Significance: It is considered to be one of the important indices that focus on  different geographic areas and stock types such as small-caps, mid-caps, and large-caps.

  • MSCI All Country World Index (ACWI): Performance of large and mid-cap segments of 23 developed and 27 emerging markets is measured using MSCI ACWI. There are around 3000 constituents in the MSCI All Country World Index. 
    • Developed markets: The developed markets that are covered in this index are:
      • Canada and US in America region.
      • 16 countries in Europe region (including Germany, France, Italy, UK.)
      • 5 countries in pacific region – Australia, Japan, Hong Kong, Singapore and New Zealand.
    • Emerging market: India is an emerging market. The other emerging markets from Asia are listed below:
      • China
      • Indonesia
      • Korea
      • Malaysia
      • Pakistan
      • Philippines
      • Taiwan
      • Thailand
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