Remy Briand, MSCI managing director and global head of research, said significant steps have been taken toward the eventual inclusion of China A-shares in the MSCI Emerging Markets Index, as A-shares demonstrate a clear commitment by the Chinese authorities to bring accessibility to the domestic market closer to international standards.

Analysts said regulatory hurdles and restrictions remain on overseas investors accessing the Chinese stock market, which could help explain MSCI's decision on the exclusion.

Wendy Liu, chief China strategist at Nomura Securities said, "The 20 percent of net asset value monthly repatriation limit for Qualified Foreign Institutional Investors and Renminbi Qualified Foreign Institutional Investors remains a significant hurdle for investors ...

"However, removal of the limit may increase the pressure on capital outflows during onshore market downturns, and this is a valid concern for Chinese authorities," she said.

Contact the writer at wuyiyao@chinadaily.com.cn