MSCI said more China-listed shares could be added in the future if the country loosens restrictions further.
The New York-based index compiler will add 222 mainland A-share companies to its gauges next year, with a combined weighting of just 0.73 percent in its global emerging markets measure by August 2018, according to MSCI's website.
"When further alignment with worldwide market accessibility standards occurs, sustained accessibility is proven within Stock Connect and global institutional investors gain further experience in the market, MSCI will reflect a higher representation of China A shares in the MSCI Emerging Markets Index", said Briand.
"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." said Remy Briand, MSCI Managing Director and Chairman of the MSCI Index Policy Committee. In any case, markets had been anticipating China's inclusion this year, after having been passed over in the previous three years. However, with the rapid advancement in technology and information flow, and with political will, we believe China is likely to reach full inclusion in global indices.
Tom Orlik, chief Asia economist for Bloomberg Intelligence, said in an interview with Xinhua on Tuesday that MSCI inclusion confirms and will accelerate the trajectory of China's capital market opening. However, we think this is more likely to occur next year.
Nonetheless, he added that the anticipated outflows will have limited impact on the country's equities.
Hong Kong's Hang Seng Index dropped to 25,694 points, or 0.57 percent, with a turnover of HK$76.5 billion ($9.79 billion) on Wednesday when MSCI included the A-share index in its Emerging Markets Index.
China is larger and arguably, more complicated than Taiwan or Korea.
The index measuring price differences between dual-listed companies in Shanghai and Hong Kong hit a six-month high before ending up 0.8 per cent at 125.05.
"We continue to encounter managements of large A-share companies who have yet to appoint an investor relations officer and who see no reason for senior management to meet shareholders", Gary Greenberg, head of emerging markets at Hermes Investment Management, said in a note to clients and media. The inclusion is subject to a very small 5% partial inclusion factor, which only raises China's EM weighting from 28.1% to 29.4%, but the symbolism of the move is more significant than the current weighting. The Shanghai Composite Index gained 0.8 percent, to 3,180.10 points. "MSCI validates this thesis with inclusion of A-shares".