Chinese stocks will be included for the first time in a leading U.S. index of emerging market shares.
The New York-based index giant MSCI said Tuesday that it would add 222 Chinese A shares beginning next year.
"International investors have embraced the positive changes in the accessibility of the China A shares market over the last few years, and now all conditions are set for MSCI to proceed with the first step of the inclusion," Remy Briand, MSCI managing director and chairman of the MSCI Index Policy Committee, said in a release.
MSCI's decision to give the Chinese shares the green light represents a victory for the Chinese government, which has long sought MSCI inclusion because it could help establish Shanghai and Shenzhen as global financial centers.
MSCI has in the past cited obstacles such as China's restrictions on market access and on moving capital in and out of the country. Prior to Tuesday's decision, it had excluded Chinese shares for three years in a row.
"Inclusion in the MSCI index family is a strong signal of greater market openness, and it will undoubtedly help the A share market to attract broader attention and participation of international investors," said Yannan Chenye, head of China equities research and portfolio manager at Harvest Global investments in Hong Kong.
While China celebrated, Argentinian investors reeled as the index compiler defied predictions that the country would be upgraded to emerging-market status, keeping it in its frontier group for at least another year.
MSCI also said it would consult on adding Saudi Arabia to the benchmark, and that Nigeria would remain a frontier market, awaiting further review on a possible downgrade to "standalone" status.