The inclusion of Chinese equities into global benchmarks will dilute the weighting of Australia's position in the Asia ex-Japan region, but it will be beneficial for both the local companies and the economy, Credit Suisse says. 
On Wednesday, sharemarket index provider MSCI will announce whether it will include Chinese mainland A-shares into its emerging market index, which will open the stocks to more foreign buyers. 
It follows last year's drama-filled decision, in which MSCI ultimately abstained, blaming uncertainty about access and ownership. A 68 per cent surge in shares in anticipation of the inclusion was followed by a brutal sell-off and contributed to the collapse in gains on Shanghai Composite Index by   August. 
Credit Suisse equity strategist Hasan Tevfik said the investment bank put the likelihood of a confirmation of inclusion at Wednesday's meeting at 10 per cent, with the more likely outcome an in-principal approval, but the odds of no decision being made most likely at 60 per cent. 
"We believe it is a matter of when, not if, China A-shares are included in major global and regional equity benchmarks," Mr Tevfik said. 
As China continues with its reforms and its shares are included in more global benchmarks, it will slowly but surely become a behemoth in regional equities while shrinking Australia's weighting in the region. 
 Weighting to drop 
In Credit Suisse's Asia ex-Japan benchmark just 7 per cent is made up of Chinese equities, but this is expected to rise to 30 per cent by 2030.
Through this transition, Australia's weighting would fall from 14 per cent to just 6 per cent, continuing a trend of equities' "centre of gravity" drifting away from Australia - in 1975 this centre was somewhere near Kakadu in northern Australia; it is now in the South China Sea between Vietnam and the Philippines.
While inaccessible to most foreign buyers - A shares are bought through tightly managed schemes including the Shanghai-Hong Kong Stock Connect - the total market cap of companies listed on the Shanghai and Shenzhen A-shares markets is around $US6 trillion.
In contrast, the total market cap of the Asia ex-Japan benchmark is around $US8 trillion - of which the ASX 200 makes up $US1.1 trillion, Mr Tevfik said. 
But Credit Suisse estimates just $2 trillion of shares would be included in 2017, on free-float, size and liquidity restrictions. 
Significantly, while Australia's weighting would diminish further over time, China's reforms and inclusion would be beneficial to Australian companies and the economy. 
"Instead of worrying about China marginalising Australia in the region, we believe we should applaud the hard work by the Chinese authorities to open up a new, large pool of capital for Australia's companies," he said.
"The reform process in China should mean Australian companies will be able to tap a new and deep pool of equity capital."
 Dual listings 
Dual listings of Australian companies on Chinese bourses would boost the capital available, or companies may opt to list or demerge their Asian assets in China, he said. 
"There could be dual listings of Australian companies on Chinese bourses. Also, Australian companies would have the option of listing or demerging their Asian assets in China."
Reform in the equity markets could also support more outbound merger and acquisition activity, almost all of which is paid in cash, he said. 
Among the beneficiaries of China's reforms, Credit Suisse has identified Computershare, Macquarie Group and Platinum Asset Management.
Around 6 per cent of Computershare's revenue is in Asia, and it is likely to win business in China, while Macquarie Securities Asia contributes around 6 per cent of the group's second-half operating income and has a broad footprint established in Asia.
Platinum has the longest history of investing in China, with a deep knowledge in the region to set it apart. 
But don't expect Wednesday's decision to roil markets in the vein of 2015, AXA Investment Managers' Mark Tinker said. This year's decision is "far less relevant".
"The MSCI may or may not include some weighting for A shares, but the notion of a wall of 'dumb money' coming in to buy at any price was always extremely dubious," he said.
The lack of speculation in the lead-up to the decision - also overshadowed by the US Federal Reserve meeting and Brexit decision in the next two weeks - should keep any reaction muted.