Last summer, US senator Marco Rubio sent an incendiary open letter to MSCI — a financial index provider and analytical software provider little-known outside the world of investing. He accused it of putting US pensioners at risk, supporting Chinese human rights abuses and even imperilling American national security.
The trigger was MSCI’s 2018 decision to include some Chinese stocks in its benchmarks, especially its influential MSCI Emerging Markets index. The company gradually increased the weighting of Chinese equities during 2019 to 4 per cent of the EM index, which is used as a benchmark by investors managing nearly $2tn.
Many of those investors are American, and the prospect of US money gushing into China’s stock market at a time of rising tensions between Washington and Beijing infuriated the Florida senator and one-time Republican presidential candidate.