By SHI JING in Shanghai

The technology-focused STAR Market of the Shanghai Stock Exchange is gaining increasing attention from international investors, judging by the latest inclusion of five STAR Market stocks in the MSCI flagship index.

Five STAR Market stocks were included in the MSCI China A Index Series which was revised on Tuesday to add Tianjin-based biomedicine company CanSino Biologics Inc, China Railway Signal & Communication Corporation Ltd, Shanghai-based semiconductor maker Montage Technology, battery test equipment manufacturer Zhejiang HangKe Technology Inc Co and Yantai-based electrical components maker Raytron Technology.

This is the first time that the STAR Market-listed companies are being included in the MSCI China A Index Series, the MSCI flagship market cap index series. The changes will take place from May 27.

The latest inclusion was announced at the semi-annual index review for the MSCI equity indexes. Apart from the five STAR Market stocks, another 34 securities have been added into the MSCI China A Index, while 19 have been deleted.

Adjustments have also been made to MSCI's specialty market cap indexes for China. There will be 26 additions and 77 deletions from the MSCI China A Onshore Index, while 60 additions and 26 deletions will be made in the MSCI China All Shares Index.

MSCI has devoted more attention to China's stock market this year. The New York-based index compiler launched the MSCI China Tech Indexes in late February. On April 28, it announced the launch of a new suite of China Thematic Indexes. The 20 new indexes span three identified megatrend categories, which are widely expected to significantly impact the economies and societies around the world in the future, including transformative technologies, society and lifestyle, and environment and resources.

"We have identified 10 trends fueling China's economic growth and constructed the China Thematic Indexes to help investors capitalize on opportunities created by these macroeconomic, technological and demographic trends that are both structural and transformative in nature," said Doug Walls, APAC head of index products at MSCI.

The STAR Market, which has seen 272 floats so far, has been gaining traction among international investors during the last two years.

British financial service provider FTSE Russell said on Feb 22 that it would include 50 eligible STAR Market stocks into its FTSE Global All Cap China A Inclusion index, which took effect on March 22.

Total foreign investment in the STAR Market rose from 270 million yuan ($41.9 million) at the end of 2019 to 5.64 billion yuan by November, according to China Renaissance Securities.

A total of 12 STAR Market-listed companies have been included in the Shanghai-Hong Kong stock connect program since the beginning of February, which means that overseas investors no longer need to turn to the qualified foreign institutional investor channel to buy STAR Market shares.