On May 12, 2026, MSCI, the global index giant, announced the quarterly review results of its Global Standard Index, which will officially take effect after the market close on May 29.
This adjustment represents a significant overhaul of relevant indices in China: the MSCI China Index added 22 stocks and removed 24, while Hong Kong-listed and Taiwan-listed stocks simultaneously reduced weightings in traditional industries. The core of the adjustment is clear — advanced technology (especially optical communication) emerged as the biggest winner, while commercial real estate, traditional manufacturing, consumer electronics, and some financial targets were delisted. This likely reflects global capital’s valuation logic regarding China’s industrial upgrading.
Taiwan and Hong Kong Stocks: Removal of Traditional Sectors, with Taiwan’s Only New Addition Focused on Semiconductor Prosperity
In this adjustment, the MSCI Hong Kong Index continued its ‘contraction’ trend, with no new additions but only the removal of Wheelock & Co.’s flagship commercial real estate entity,$WHARF HOLDINGS (00004.HK)$possibly reflecting foreign investors’ hesitation about the recovery prospects of Hong Kong’s commercial real estate. Traditional real estate and financial sectors remain out of favor with global capital.
The MSCI Taiwan Index underwent a structural adjustment of ‘one inclusion and seven exclusions’: the sole inclusion was MPI Corporation, a leader in semiconductor testing equipment, precisely aligning with the high-growth cycle of back-end semiconductor testing, benefiting from booming global demand for advanced packaging and chip testing. However, seven Taiwan-listed companies were excluded, spanning seven traditional mature sectors such as cement, Apple supply chain, aviation, contract manufacturing, chemical fibers, high-speed rail, and electric motors. These include Asia Cement (cement), Catcher Technology (Apple supply chain metal casings), China Airlines (aviation), Compal Electronics (notebook/server contract manufacturing), Far Eastern New Century (polyester fibers), Taiwan High Speed Rail (high-speed rail operations), and Teco Electric & Machinery (industrial motors).
The logic behind Taiwan’s stock adjustment is straightforward: foreign capital is withdrawing from low-growth, highly cyclical, and increasingly competitive traditional manufacturing and service sectors, shifting toward high-barrier, high-growth advanced technologies like semiconductors. The trends of ‘de-real estate-ization, de-outsourcing-ization, and de-cyclicality’ are evident.
MSCI China Index: 22 Stocks Added to Focus on High Growth, 24 Stocks Removed to Bid Farewell to Old Drivers
The MSCI China Index (including Hong Kong, mainland China A-shares, and U.S.-listed ADRs) added 22 new constituent stocks and removed 24 this time. Optical communication emerged as the dominant theme, supported by new energy, semiconductors, and pharmaceuticals; traditional military, consumer electronics, finance, and real estate-related sectors have fully receded.
Inclusion List: Optical Communication Forms a Unified Chain, Diverse High-Growth Synergies Resonate
Among the 22 newly added stocks, the optical communication industry chain accounted for seven positions, covering all segments from fiber preforms, optical modules, optical chips to connectors and quartz materials, making it the biggest winner of the adjustment. The remaining stocks are distributed across high-growth sectors such as energy transportation, semiconductor materials, new energy, and innovative pharmaceuticals.
1) Hong Kong stocks (2 companies): international crude oil transporters$COSCO SHIP ENGY (01138.HK)$and copper-clad laminate/PCB substrate operators$KB LAMINATES (01888.HK)$。
2) US-listed Chinese stocks (1 company): road freight platform$Full Truck Alliance (YMM.US)$。
3) A-shares (19 companies, including 7 in optical communication and 12 others):
Optical communication full chain (7 companies):$Yangtze Optical Fibre And Cable Joint Stock (601869.SH)$(global fiber optic leader),$Advanced Fiber Resources (300620.SZ)$(fiber optic components),$EverProX Technologies (300548.SZ)$(optical modules),$Henan Shijia Photons Technology (688313.SH)$(optical splitters),$Hubei Feilihua Quartz Glass (300395.SZ)$(Quartz materials),$Jiangsu Etern (600105.SH)$(Specialty optical cables),$Sichuan Huafeng Technology (688629.SH)$(Optical communication connectors).
Other high-growth sectors (12 companies):$Canmax Technologies (300390.SZ)$(Lithium battery materials),$Dajin Heavy Industry (002487.SZ)$(Wind power steel structures),$Guocheng Mining (000688.SZ)$(Non-ferrous metals),$REMEGEN (09995.HK)$(688331.SH, Innovative Pharmaceuticals),$Hunan Yuneng New Energy Battery Material (301358.SZ)$(Lithium battery cathode materials),$Raytron Technology (688002.SH)$(Sensors),$Shenzhen Kedali Industry (002850.SZ)$(Lithium battery structural components),$BIOKIN (02615.HK)$(Innovative Pharmaceuticals), $Suzhou Centec Communications (688702.SH)$(Ethernet switch chips),$Delton Technology (001389.SZ)$(industrial ventilation equipment), etc.
Exclusion List: 24 Stocks Removed, Covering Four Weak Sectors
The 24 excluded stocks are concentrated in traditional military industries, consumer electronics, finance, real estate supply chains, and low-growth technology sectors, potentially reflecting foreign capital’s continued avoidance of ‘low growth, low entry barriers, weak innovation’ segments:
Traditional Military Industry (1 company):$AVICHINA (02357.HK)$；
Consumer Electronics (4 companies):$Beijing Roborock Technology (688169.SH)$、$GalaxyCore Inc. (688728.SH)$、$OFILM Group Co., Ltd (002456.SZ)$、$Shenzhen Goodix Technology (603160.SH)$；
Financial Securities (5 firms): First Capital Securities, $CITIC FAMC (02799.HK)$, Guojin Securities, Western Securities, etc.;
Low-growth technology/consumer (14 firms): $Wuxi Best Precision Machinery (300580.SZ)$、$CHINA LIT (00772.HK)$、$CHINA CRSC (03969.HK)$, EverDisplay Optronics, JinAo Technology, Jiangsu Ninghu Expressway, $Shandong Golden Empire Precision Machinery Technology (603270.SH)$、$Jiangsu Yuyue Medical Equipment & Supply (002223.SZ)$、$MEITU (01357.HK)$、$NETEASE MUSIC (09899.HK)$、$WEIGAO GROUP (01066.HK)$、$Zhejiang Wanfeng Auto Wheel (002085.SZ)$.
It may indicate that foreign capital is reducing positions in assets lacking technological barriers, experiencing sluggish earnings growth, deteriorating industry competition, or having valuations inconsistent with growth prospects, to align with the new industrial cycle dominated by global AI computing power and the digital economy.
Optical Communications: The Golden Track for MSCI’s ‘Position Building’
The most critical highlight of this adjustment is the collective inclusion of seven companies in the optical communications supply chain into the MSCI China Index, covering the entire spectrum from ‘optical fiber – optical modules – optical components – optical materials – optical chips,’ making them the ‘absolute protagonists’ of this index adjustment. This outcome is no coincidence but may reflect feedback on the explosive performance, tight supply-demand balance, and high growth driven by AI computing power in the optical communications sector, which has recently shone brightly in the equity market.
From a fundamental perspective, the optical communications industry is entering a supercycle characterized by rising volumes and prices, doubling earnings, and orders booked until 2029. Even Jensen Huang acknowledged that optical interconnects are a key focus in future data center infrastructure construction.
Since 2026, the optical communications sector has consistently led gains in the A-share market, delivering significant excess returns and becoming the strongest main theme in the market. Northbound capital has continued to increase its holdings in leading optical communications companies, while public funds have also substantially raised their allocations in the sector. Expectations of inclusion in the MSCI have attracted passive capital, and once officially included, this sector could see an inflow of incremental funds, reinforcing its upward trend.
The logic behind MSCI’s inclusion may include:
1) High Growth Potential: Optical communications serve as a core component of AI computing power infrastructure, directly benefiting from the global wave of AI server and data center construction. Its future growth rate is highly likely to far exceed that of traditional industries.
2) Global Competitiveness: Chinese enterprises hold a significant share of the global market in optical modules and optical fibers, particularly in the high-end 800G/1.6T product segments, where they possess triple barriers in technology, cost, and production capacity, giving them strong global influence.
3) Earnings visibility: The order books of the above-mentioned optical industry listed companies have been locked in for the next few years. Under the tight supply-demand balance, this may drive prices to continue rising, ensuring high earnings growth visibility and sustainability, which aligns well with the long-term allocation needs of foreign capital.
4) Domestic digital economy planning, along with advancements in 6G research and development, may further expand the long-term potential of optical communications.
Editor/melody
