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MSCI

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MSCI Inc. 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 products. It operates the MSCI World, MSCI All Country World Index (ACWI) and MSCI Emerging Markets Indices among others.

MSCI Inc.
Company typePublic
Founded1968; 56 years ago (1968)
Headquarters
7 World Trade Center
Manhattan, New York City
,
United States
Key people
Services
RevenueIncrease US$2.53 billion (2023)
Increase US$1.38 billion (2023)
Increase US$1.15 billion (2023)
Total assetsIncrease US$5.52 billion (2023)
Total equityNegative increase US$−740 million (2023)
Number of employees
5,794 (2023)
Websitewww.msci.com Edit this at Wikidata
Footnotes / references
[1]

The company is headquartered at 7 World Trade Center in Manhattan, New York City, U.S. Its business primarily consists of licensing its indices to index funds (ETF), which pay a fee of around 0.02 to 0.04 percent of the invested volume for the use of the index.[2] As of 2023, funds worth over 13 trillion US$ 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.[5] 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 includes 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 on fixed income indices[clarification needed], portfolio construction solutions[clarification needed], and ESG data[clarification needed], using MSCI's ESG data and MarketAxess' pricing and liquidity indicators.[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 stocks

In 2018 MSCI announced it would begin including mainland Chinese "A" shares in its MSCI Emerging Markets Index. 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.[29][30][31][32]

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.[33] 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."[34] MSCI chief executive and chairman Henry Fernandez stated there was "zero politics" behind the decision.[32] 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,[35] which will eventually lead to ca. 40% weights of its global emerging markets index.[36][37]

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.[38] In December 2020, MSCI announced that it would strip its indices of seven Chinese companies in response to Executive Order 13959.[39][40]

Although the A share full inclusion plan was noted by investors years ago, it still has not been realized as of 2024.[41]

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.[42]

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.[43] The committee concluded that MSCI channeled $3.7 billion into blacklisted entities in 2023.[44]

References

  1. ^ "MSCI Inc. 2023 Annual Report (Form 10-K)". SEC.gov. U.S. Securities and Exchange Commission. 9 February 2024. Archived from the original on 22 February 2024. Retrieved 12 February 2024.
  2. ^ Freiberger, Harald (17 April 2023). "Hohe Preise und Intransparenz – Die unheimliche Macht eines Finanzunternehmens". Der Bund (in German). Archived from the original on 2023-04-17. Retrieved 2023-04-17.
  3. ^ "Index Solutions". www.msci.com. Archived from the original on 2023-04-18. Retrieved 2023-04-18.
  4. ^ Frank J. Fabozzi; Harry M. Markowitz (2002-11-25). The Theory and Practice of Investment Management. 160. ISBN 9780471445654. Archived from the original on 2020-01-24. Retrieved 2017-09-04.
  5. ^ a b Gastineau, Gary L. (2002-02-14). The Exchange-Traded Funds Manual. John Wiley & Sons. p. 35. ISBN 9780471218944. Retrieved 18 November 2015.
  6. ^ Lawrence Carrel (2008-09-16). ETFs for the Long Run: What They Are, How They Work, and Simple Strategies. John Wiley. p. 94. ISBN 9780470437667. Archived from the original on 2020-01-24. Retrieved 2017-09-04.
  7. ^ "Morgan to take MSCI public". Investment News. Archived from the original on 2009-08-22. Retrieved 2020-05-23.
  8. ^ "MSCI Barra Spinoff Provides Look At Indexers' Inner Workings". Seeking Alpha. September 17, 2007. Archived from the original on November 24, 2016. Retrieved May 1, 2016.
  9. ^ "FAQ". MSCI, Inc. Archived from the original on 2018-07-14. Retrieved 2008-04-24.
  10. ^ Giang Nguyen (April 28, 2016). "Frontier Vietnam Eyes Step Up to Emerging-Market Big Leagues". Bloomberg. Archived from the original on July 6, 2019. Retrieved March 8, 2017.
  11. ^ Luchetti, Aaron (March 2, 2010). "MSCI Seizes RiskMetrics in Union of Niche Firms". Wall Street Journal. Archived from the original on December 30, 2018. Retrieved March 8, 2017.
  12. ^ "MSCI Scores Measurisk From JPMorgan". Forbes. July 15, 2010. Archived from the original on February 13, 2018. Retrieved September 4, 2017.
  13. ^ "People moves: IPD co-founder, former CEO leave MSCI" Archived 2016-12-15 at the Wayback Machine, realestate.ipe.com, 18 February 2016.
  14. ^ Lozada, Aaron. "MSCI completes acquisition of Investor Force". SNL News. SNL Financial LC. Archived from the original on 11 December 2019. Retrieved 8 February 2013.
  15. ^ Stein, Mara (March 11, 2016). "Battle to Grade ESG Investments Heats Up". Wall Street Journal. Archived from the original on January 14, 2019. Retrieved August 4, 2017.
  16. ^ "MSCI COMPLETES ACQUISITION OF CARBON DELTA" (Press release). MSCI. October 2, 2019. Archived from the original on January 1, 2020. Retrieved January 1, 2020.
  17. ^ "MSCI COMPLETES ACQUISITION OF REAL CAPITAL ANALYTICS" (Press release). MSCI. September 13, 2021. Archived from the original on November 12, 2021. Retrieved November 12, 2021.
  18. ^ "MSCI to acquire remaining stake in Burgiss for $697 mln in cash". Reuters. 2023-08-14. Archived from the original on 2023-08-15. Retrieved 2023-08-15.
  19. ^ "Cboe and MSCI plan options growth following partnership extension - The TRADE". www.thetradenews.com. Archived from the original on 2022-04-29. Retrieved 2022-04-29.
  20. ^ "Cboe and MSCI expand relationship". Finextra Research. 2021-10-21. Archived from the original on 2021-10-21. Retrieved 2022-04-29.
  21. ^ "MSCI and MarketAxess enter into a strategic collaboration - The TRADE". www.thetradenews.com. Archived from the original on 2022-04-29. Retrieved 2022-04-29.
  22. ^ "MSCI and MarketAxess Collaborate on Indexes". Markets Media. 2022-04-29. Archived from the original on 2022-04-29. Retrieved 2022-04-29.
  23. ^ "MSCI and MarketAxess collaborate on liquidity fixed income indexes". www.securitiesfinancetimes.com. Archived from the original on 2022-04-29. Retrieved 2022-04-29.
  24. ^ "MSCI and MarketAxess collaborate | Structured Finance | Structured Credit Investor". www.structuredcreditinvestor.com. Archived from the original on 2022-05-23. Retrieved 2022-04-29.
  25. ^ "MSCI, MarketAxess partner on fixed income indexes | News | Global Investor Group". www.globalinvestorgroup.com. Archived from the original on 2023-04-18. Retrieved 2022-04-29.
  26. ^ Robert R. Johnson; Gerald R. Jensen & Luis Garcia-Feijoo (2015). Invest with the Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy. McGraw Hill Professional. p. 165.
  27. ^ V S Somanath (February 2011). International Financial Management. I. K. International Pvt. p. 288. ISBN 9789381141076. Archived from the original on 2020-01-24. Retrieved 2017-09-04.
  28. ^ Drake, Pamela Peterson; Fabozzi, Frank J. (2012-10-01). Analysis of Financial Statements. John Wiley & Sons. p. 292. ISBN 9781118331910. Retrieved 18 November 2015.
  29. ^ Price, Michelle (2019-06-13). "U.S. senator queries MSCI over inclusion of Chinese shares in major benchmark". Reuters. Archived from the original on 2019-07-12. Retrieved 2019-06-23.
  30. ^ Yap, Livia (2019-05-12). "Foreigners Can Soon Own More China Stocks. But No One Wants Them". Bloomberg News. Archived from the original on 2019-05-18. Retrieved 2019-06-23.
  31. ^ Rogin, Josh (June 13, 2019). "China's infiltration of U.S. capital markets is a national security concern". The Washington Post. Archived from the original on June 30, 2019. Retrieved June 22, 2019.
  32. ^ a b Stafford, Philip (March 14, 2019). "MSCI denies politics swayed inclusion of more Chinese shares". Financial Times. Archived from the original on November 30, 2020. Retrieved January 17, 2021.
  33. ^ Bird, Mike (February 3, 2019). "How China Pressured MSCI to Add Its Market to Major Benchmark". The Wall Street Journal. Archived from the original on June 5, 2019. Retrieved 2019-06-23.
  34. ^ Bradsher, Keith; Stevenson, Alexandra (June 20, 2017). "China Will Be Part of a Popular Stock Index, Opening the Door to Foreign Money (Published 2017)". The New York Times. Archived from the original on July 9, 2021. Retrieved July 7, 2021.
  35. ^ "MSCI China A Inclusion". MSCI. August 2018. Archived from the original on 2019-06-30. Retrieved January 17, 2021.
  36. ^ "MSCI to quadruple weighting of China A-shares in its global benchmarks". CNBC. 2019-03-01. Archived from the original on 2019-07-02. Retrieved 2019-06-23.
  37. ^ Loder, Asjylyn (May 16, 2019). "Indexes to Unleash Flood of Money Into Chinese Stocks". The Wall Street Journal. Archived from the original on June 23, 2019. Retrieved 2019-06-23.
  38. ^ Leonard, Jenny (April 30, 2020). "Trump Weighs China Stock Ban for $50 Billion of Federal Savings". Bloomberg News. Archived from the original on May 1, 2020. Retrieved May 3, 2020.
  39. ^ Ping, Chong Koh (2020-12-16). "MSCI Drops Chinese Stocks on U.S. Blacklist". The Wall Street Journal. ISSN 0099-9660. Archived from the original on 2020-12-16. Retrieved 2020-12-16.
  40. ^ Kerber, Ross; Alper, Alexandra; Westbrook, Tom (2020-12-16). "MSCI chops Chinese firms from global indexes, but will keep them elsewhere". Reuters. Archived from the original on 2020-12-15. Retrieved 2020-12-16.
  41. ^ "Are you being left behind? Institutions are not waiting on MSCI China A-share inclusion". ETF Strategy. 2021-05-19. Archived from the original on 2021-07-09. Retrieved 2021-07-07.
  42. ^ Abdul, Geneva (2022-11-23). "Major funds exposed to companies allegedly engaged in Uyghur repression in China". The Guardian. Archived from the original on 2022-11-23. Retrieved 2022-11-23.
  43. ^ Martina, Michael; Zengerle, Patricia; Zengerle, Patricia (2023-08-03). "Subpoenas possible for BlackRock, MSCI over China investments -US House panel chair". Reuters. Archived from the original on 2023-08-03. Retrieved 2023-08-04.
  44. ^ Biswas, Pritam; Yasmin, Mehnaz (April 18, 2024). "US firms channeled funds to blacklisted Chinese companies, says House panel". Reuters. Retrieved April 18, 2024.
 
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