MSCI explained

MSCI Inc.
Type:Public
Hq Location:7 World Trade Center
Location Country:United States
Revenue: (2024)
Operating Income: (2024)
Net Income: (2024)
Assets: (2024)
Equity: (2024)
Num Employees:6,132 (2024)
Footnotes:[1]

MSCI Inc. (formerly Morgan Stanley Capital International) is an American finance company headquartered in New York City. MSCI is a global provider of equity, fixed income, real estate indices, multi-asset portfolio analysis tools, ESG and climate finance products. It operates the MSCI World, MSCI Emerging Markets, and MSCI All Country World (ACWI) indices, among others.

The company is headquartered at 7 World Trade Center in Manhattan. Its business primarily consists of licensing its indices to index funds, such as exchange-traded funds (ETFs), which pay a fee of around 0.02 to 0.04 percent of the invested volume for the use of the index.[2] funds worth over US$16.5 trillion were based on MSCI indices.[3]

History

In 1968, Capital International published indices covering the global stock market for non-U.S. markets. In 1986, Morgan Stanley licensed the rights to the indices from Capital International and branded the indices as the Morgan Stanley Capital International (MSCI) indices.[4] By the 1980s, the MSCI indices were the primary benchmark indices outside of the U.S. before being joined by FTSE, Citibank, and Standard & Poor's.[5] After Dow Jones started float weighting its index funds, MSCI followed. In 2004, MSCI acquired Barra, Inc., to form MSCI Barra.[6] In mid-2007, parent company Morgan Stanley decided to divest MSCI.[7] This was followed by an initial public offering of a minority of stock in November 2007.[8] The divestment was completed in 2009.[9] The company is headquartered in New York City.[10]

Some companies in MSCI's peer group include Glass Lewis, Factset, Sovereign Wealth Fund Institute, and S&P.

Acquisitions

In 2010, MSCI acquired RiskMetrics Group, Inc.[11] and Measurisk.[12]

In 2012, MSCI acquired Investment Property Databank.[13]

In 2013, MSCI acquired Investor Force from ICG Group (formerly Internet Capital Group).[14]

In August 2014, MSCI acquired GMI Ratings.[15]

In October 2019, MSCI acquired Carbon Delta, a Zurich-based climate change analytics company.[16]

In September 2021, MSCI acquired Real Capital Analytics.[17]

In August 2023, MSCI completed the acquisition of New Jersey–based private assets data provider, Burgiss Group for $697 million.[18]

Collaborations

In October 2021, MSCI and Cboe Global Markets signed a licensing agreement that would see MSCI grow its options product suite and allow them to work on other projects as well.[19] [20]

In April 2022, MSCI entered into a collaboration with MarketAxess to incorporate MSCI's environmental, social, and governance (ESG) data and MarketAxess' pricing and liquidity indicators into fixed income indices in order to construct portfolios based on this data.[21] [22] [23] [24] [25]

Indices

The MSCI global equity indices have been calculated since 1969 and include MSCI World[26] and MSCI EAFE.[27] Initially, the company used eight factors in developing its indices: momentum, volatility, value, size, growth, size nonlinearity, liquidity, and financial leverage.[28]

Inclusion of Chinese A-shares

In 2018 MSCI began including Chinese A-shares in its MSCI Emerging Markets Index.[29] Initially the domestic Chinese companies received a 5% weighting in the index. MSCI is the last major index provider to include the companies, but some investors have questioned the risk as many Chinese listed companies refuse to permit the Public Company Accounting Oversight Board to inspect their financial records. The action of including Chinese stocks into MSCI EM Index also received criticism and questions from Senator Marco Rubio and some others regarding the U.S. national security.[30] [31] [32] [33]

In February 2019, The Wall Street Journal reported the decision was the result of pressure from the Chinese government according to people familiar with the matter.[34] The New York Times reported that "The Chinese government long sought MSCI inclusion because it could help establish Shanghai and Shenzhen as global financial centers."[35] MSCI chief executive and chairman Henry Fernandez stated there was "zero politics" behind the decision. In March 2019, CNBC reported that MSCI have a future plan of inclusion based on market capitalization of mainland Chinese shares in its global benchmarks,[36] which will eventually lead to ca. 40% weights of its global emerging markets index.[37] [38]

In April 2020, it was reported that Donald Trump was considering an executive action to prohibit the Thrift Savings Plan from transferring $50 billion to mirror the MSCI All Country World Index fund.[39] In December 2020, MSCI announced that it would strip its indices of seven Chinese companies in response to Executive Order 13959.[40] [41]

Although the A share full inclusion plan was noted by investors years ago, full inclusion had not been realized [42]

In November 2022, a study by Sheffield Hallam University and Hong Kong Watch identified three major stock indices provided by MSCI that include at least 13 companies allegedly involved in forced labor and mass surveillance of Uyghurs.[43]

In August 2023, the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party announced an investigation into MSCI's investments in China.[44] The committee concluded that MSCI channeled $3.7 billion into blacklisted entities in 2023.[45]

See also

Notes and References

  1. Web site: MSCI Inc. 2024 Annual Report (Form 10-K) . February 7, 2025 . SEC.gov . . February 7, 2025 .
  2. Web site: Freiberger . Harald . April 17, 2023 . Hohe Preise und Intransparenz – Die unheimliche Macht eines Finanzunternehmens . April 17, 2023 . . de . April 17, 2023 . https://web.archive.org/web/20230417141912/http://www.tagesanzeiger.ch/die-unheimliche-macht-eines-finanzunternehmens-174102293496 . live .
  3. Web site: MSCI Indexes . MSCI.com . January 1, 2025 .
  4. Book: Frank J. . Fabozzi . Harry M. . Markowitz . November 25, 2002 . The Theory and Practice of Investment Management . 160 . 9780471445654 . September 4, 2017 . https://web.archive.org/web/20200124221236/https://books.google.com/books?id=McX0M0eoxLwC&pg=PA160 . January 24, 2020 . live .
  5. Book: Gastineau, Gary L. . February 14, 2002 . The Exchange-Traded Funds Manual . November 18, 2015 . John Wiley & Sons . 9780471218944 . 35 .
  6. Book: ETFs for the Long Run: What They Are, How They Work, and Simple Strategies . 94 . Lawrence Carrel . John Wiley . 9780470437667 . September 16, 2008 . September 4, 2017 . https://web.archive.org/web/20200124221238/https://books.google.com/books?id=pTgSRklESDUC&pg=PT94 . January 24, 2020 . live .
  7. Web site: Morgan to take MSCI public. Investment News. May 23, 2020. https://web.archive.org/web/20090822233103/http://www.investmentnews.com/apps/pbcs.dll/article?AID=%2F20070731%2FREG%2F70731007%2F-1%2FINDaily01. August 22, 2009. live.
  8. Web site: MSCI Barra Spinoff Provides Look At Indexers' Inner Workings . Seeking Alpha . September 17, 2007 . May 1, 2016 . https://web.archive.org/web/20161124174754/http://seekingalpha.com/article/47322-msci-barra-spinoff-provides-look-at-indexers-inner-workings . November 24, 2016 . live .
  9. Web site: FAQ . MSCI, Inc. . https://web.archive.org/web/20180714145235/http://ir.msci.com/faq.cfm . July 14, 2018 .
  10. News: Frontier Vietnam Eyes Step Up to Emerging-Market Big Leagues . Bloomberg . April 28, 2016 . Giang Nguyen . March 8, 2017 . https://web.archive.org/web/20190706091001/https://www.bloomberg.com/news/articles/2016-04-29/frontier-vietnam-eyes-promotion-to-emerging-market-big-leagues . July 6, 2019 . live .
  11. News: Luchetti . Aaron . MSCI Seizes RiskMetrics in Union of Niche Firms . Wall Street Journal . March 2, 2010 . March 8, 2017 . https://web.archive.org/web/20181230205447/https://www.wsj.com/articles/SB10001424052748704754604575095100547835756 . December 30, 2018 . live .
  12. Web site: MSCI Scores Measurisk From JPMorgan . Forbes . July 15, 2010 . September 4, 2017 . https://web.archive.org/web/20180213080956/https://www.forbes.com/2010/07/15/msci-buys-jpmorgans-measurisk-marketnewsvideo.html . February 13, 2018 . live .
  13. http://realestate.ipe.com/news/people/people-moves-ipd-co-founder-former-ceo-leave-msci/10011971.fullarticle "People moves: IPD co-founder, former CEO leave MSCI"
  14. Web site: Lozada . Aaron . MSCI completes acquisition of Investor Force . SNL News . SNL Financial LC . February 8, 2013 . December 11, 2019 . https://web.archive.org/web/20191211220113/http://www.snl.com/InteractiveX/article.aspx?ID=16864989&KPLT=2 . live .
  15. Web site: Stein . Mara . Battle to Grade ESG Investments Heats Up . Wall Street Journal . March 11, 2016 . August 4, 2017 . https://web.archive.org/web/20190114062548/https://blogs.wsj.com/riskandcompliance/2016/03/11/battle-to-grade-esg-investments-heats-up/ . January 14, 2019 . live .
  16. MSCI Completes Acquisition of Carbon Delta . MSCI . October 2, 2019 . January 1, 2020 . https://web.archive.org/web/20200101135622/http://ir.msci.com/news-releases/news-release-details/msci-completes-acquisition-carbon-delta . January 1, 2020.
  17. MSCI COMPLETES ACQUISITION OF REAL CAPITAL ANALYTICS . MSCI . September 13, 2021 . November 12, 2021 . November 12, 2021 . https://web.archive.org/web/20211112155049/https://ir.msci.com/news-releases/news-release-details/msci-completes-acquisition-real-capital-analytics . live .
  18. News: August 14, 2023 . MSCI to acquire remaining stake in Burgiss for $697 mln in cash . Reuters . August 15, 2023 . August 15, 2023 . https://web.archive.org/web/20230815164422/https://www.reuters.com/markets/deals/msci-acquire-remaining-stake-burgiss-697-mln-cash-2023-08-14/ . live .
  19. Web site: Cboe and MSCI plan options growth following partnership extension . April 29, 2022 . TheTradeNews.com . April 29, 2022 . https://web.archive.org/web/20220429171339/https://www.thetradenews.com/cboe-and-msci-plan-options-growth-following-partnership-extension/ . live .
  20. Web site: October 21, 2021 . Cboe and MSCI expand relationship . April 29, 2022 . Finextra Research . October 21, 2021 . https://web.archive.org/web/20211021202337/https://www.finextra.com/pressarticle/89909/cboe-and-msci-expand-relationship . live .
  21. Web site: MSCI and MarketAxess enter into a strategic collaboration - The TRADE . live . https://web.archive.org/web/20220429185446/https://www.thetradenews.com/msci-and-marketaxess-enter-into-a-strategic-collaboration/ . April 29, 2022 . April 29, 2022 . TheTradeNews.com .
  22. Web site: April 29, 2022 . MSCI and MarketAxess Collaborate on Indexes . live . https://web.archive.org/web/20220429093632/https://www.marketsmedia.com/msci-and-marketaxess-collaborate-on-indexes/ . April 29, 2022 . April 29, 2022 . Markets Media .
  23. Web site: MSCI and MarketAxess collaborate on liquidity fixed income indexes . live . https://web.archive.org/web/20220429121208/https://www.securitiesfinancetimes.com/securitieslendingnews/industryarticle.php?article_id=225515&navigationaction=industrynews&newssection=industry . April 29, 2022 . April 29, 2022 . SecuritiesFinanceTimes.com .
  24. Web site: MSCI and MarketAxess collaborate Structured Finance Structured Credit Investor . live . https://web.archive.org/web/20220523234947/https://www.structuredcreditinvestor.com/Article.asp?article=MSCI-and-MarketAxess-collaborate&PUB=&ISS=27164&SID=79534 . May 23, 2022 . April 29, 2022 . StructuredCreditInvestor.com .
  25. News: MSCI, MarketAxess partner on fixed income indexes . live . https://web.archive.org/web/20230418022636/https://www.globalinvestorgroup.com/articles/3698528/msci-marketaxess-partner-on-fixed-income-indexes . April 18, 2023 . GlobalInvestorGroup.com . April 29, 2022 .
  26. Book: 165 . Invest with the Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy . Johnson . Robert R. . Jensen . Gerald R. . Garcia-Feijoo . Luis . amp . McGraw Hill Professional . 2015.
  27. Book: Somanath, V.S. . International Financial Management . 288 . 9789381141076 . February 2011 . I. K. International Pvt . September 4, 2017 . https://web.archive.org/web/20200124221239/https://books.google.com/books?id=alysnLedf5oC&pg=PA288 . January 24, 2020 . live .
  28. Book: Drake . Pamela Peterson . Fabozzi . Frank J. . Analysis of Financial Statements . November 18, 2015 . October 1, 2012 . John Wiley & Sons . 9781118331910 . 292 .
  29. Book: Leutert, Wendy . China's State-Owned Enterprises: Leadership, Reform, and Internationalization . 2024 . . 978-1-009-48654-5 . Business and Public Policy Series . Cambridge . 158.
  30. News: U.S. senator queries MSCI over inclusion of Chinese shares in major benchmark. Price. Michelle. June 13, 2019. Reuters. June 23, 2019 . https://web.archive.org/web/20190712072109/https://www.reuters.com/article/msci-indexes-rubio-idUSL4N23K3LW . July 12, 2019 . live .
  31. News: Foreigners Can Soon Own More China Stocks. But No One Wants Them . Yap . Livia . May 12, 2019 . . June 23, 2019 . https://web.archive.org/web/20190518234301/https://www.bloomberg.com/news/articles/2019-05-12/msci-is-adding-china-stocks-just-when-foreigners-don-t-want-them. May 18, 2019 . live .
  32. News: China's infiltration of U.S. capital markets is a national security concern . Rogin . Josh . June 13, 2019 . . June 22, 2019 . https://web.archive.org/web/20190630111603/https://www.washingtonpost.com/opinions/2019/06/13/chinas-infiltration-us-capital-markets-is-national-security-concern/ . June 30, 2019 . live .
  33. Web site: MSCI denies politics swayed inclusion of more Chinese shares . Stafford . Philip . . March 14, 2019 . January 17, 2021 . November 30, 2020 . https://web.archive.org/web/20201130123743/https://www.ft.com/content/bbe7b2c2-45ca-11e9-b168-96a37d002cd3 . live .
  34. Web site: How China Pressured MSCI to Add Its Market to Major Benchmark. Bird. Mike. February 3, 2019. . June 23, 2019. https://web.archive.org/web/20190605220607/https://www.wsj.com/articles/how-china-pressured-msci-to-add-its-market-to-major-benchmark-11549195201. June 5, 2019. live.
  35. Web site: China Will Be Part of a Popular Stock Index, Opening the Door to Foreign Money (Published 2017) . Bradsher . Keith . Stevenson . Alexandra . . June 20, 2017 . July 7, 2021 . July 9, 2021 . https://web.archive.org/web/20210709231958/https://www.nytimes.com/2017/06/20/business/dealbook/china-msci-stock-index.html . live .
  36. Web site: MSCI China A Inclusion . MSCI . August 2018 . January 17, 2021 . https://web.archive.org/web/20190630185701/https://www.msci.com/msci-china-a-inclusion. June 30, 2019. live.
  37. Web site: MSCI to quadruple weighting of China A-shares in its global benchmarks. March 1, 2019. CNBC . June 23, 2019. https://web.archive.org/web/20190702031541/https://www.cnbc.com/2019/03/01/msci-to-quadruple-weighting-of-china-a-shares-in-global-benchmarks.html. July 2, 2019. live.
  38. Web site: Indexes to Unleash Flood of Money Into Chinese Stocks. Loder . Asjylyn . May 16, 2019 . . June 23, 2019 . https://web.archive.org/web/20190623031145/https://www.wsj.com/articles/indexes-to-unleash-flood-of-money-into-chinese-stocks-11558006200. June 23, 2019 . live .
  39. News: Leonard . Jenny . April 30, 2020 . Trump Weighs China Stock Ban for $50 Billion of Federal Savings . . live . May 3, 2020 . https://web.archive.org/web/20200501222501/https://www.bloomberg.com/news/articles/2020-05-01/trump-considers-order-to-block-savings-fund-from-chinese-firms . May 1, 2020 .
  40. News: Ping. Chong Koh. December 16, 2020. MSCI Drops Chinese Stocks on U.S. Blacklist . The Wall Street Journal. live. December 16, 2020. 0099-9660. December 16, 2020. https://web.archive.org/web/20201216060509/https://www.wsj.com/articles/msci-drops-chinese-stocks-on-u-s-blacklist-11608098310.
  41. News: Kerber . Ross . Alper . Alexandra . Westbrook . Tom . December 16, 2020 . MSCI chops Chinese firms from global indexes, but will keep them elsewhere . . live . December 16, 2020 . December 15, 2020 . https://web.archive.org/web/20201215232546/https://www.reuters.com/article/us-usa-china-indexes-idUSKBN28P321 .
  42. Web site: May 19, 2021 . Are you being left behind? Institutions are not waiting on MSCI China A-share inclusion . July 7, 2021 . ETF Strategy . July 9, 2021 . https://web.archive.org/web/20210709184542/https://www.etfstrategy.com/are-you-being-left-behind-institutions-are-not-waiting-on-msci-china-a-share-inclusion-98547/ . live .
  43. Web site: Abdul . Geneva . November 23, 2022 . Major Funds Exposed to Companies Allegedly Engaged in Uyghur Repression in China . November 23, 2022 . . November 23, 2022 . https://web.archive.org/web/20221123180657/https://www.theguardian.com/world/2022/nov/23/major-pension-funds-exposed-companies-investing-uyghur-repression-china . live .
  44. News: Martina . Michael . Zengerle . Patricia . Zengerle . Patricia . August 3, 2023 . Subpoenas Possible for BlackRock, MSCI over China Investments -US House Panel Chair . . August 4, 2023 . August 3, 2023 . https://web.archive.org/web/20230803233423/https://www.reuters.com/business/finance/subpoenas-possible-blackrock-msci-over-china-investments-us-house-panel-chair-2023-08-03/ . live .
  45. News: Biswas . Pritam . Yasmin . Mehnaz . April 18, 2024 . US Firms Channeled Funds to Blacklisted Chinese Companies, Says House Panel . . April 18, 2024 .

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