The markets did recover after the initial sell-off.

　　While Morgan Stanley has decided to pass on listing Chinese A-shares for the time being, it says it is working with the China Securities Regulatory Commission on resolving the three main concerns it has.

　　They include the quota allocation process, restrictions on capital mobility and beneficial ownership.

　　Observers are suggesting the working group may make enough headway on these issues for Morgan Stanley to list Chinese A-shares on its indices by late-Summer or early Fall.

　　A股暂未被纳入MSCI指数

　　Xu Yuqin with Sinolink Securities says once that happens, it should help create more global recognition of China's A-share market.

　　"Foreign capital will help reform the market and build a bridge to international markets. If you look at H shares and A-shares for example, H shares value dividends, profitability and sustainable company performances more, but innovative industries have a high profile and a high market value on the A-share market. They are different."

　　H-Shares are stocks from companies listed in Hong Kong.

　　Once A-share issues become listed on Morgan Stanley's Emerging Market index, funds that track those indexes will automatically buy into a certain amount of A-share stocks when they are included in the index.

　　It's estimated this could see an additional 40-billion yuan worth of foreign capital moving into mainland stocks.

　　Jin Shanghao, the president of ChinaHedge Fund Service, is warning investors not to be overly excited by the prospect of A-shares being listed by Morgan Stanley.

　　"150 billion US dollars cannot flow into the market in just one day. Even if the market is included next time, it will definitely not be given a 100 percent weighting. Foreign investors, as an example, could start investing in December. But it would take a couple of months for the markets to start registering that. Even if A-shares were 100 percent included in the next two years, 150 billion US dollars might not have that much influence, with Shanghai stocks hitting a daily turnover of 1 trillion yuan."

　　The Shanghai Stock Exchange has seen its value surge almost 50 percent so far this year.

　　However, the markets have been volatile.

　　Shanghai dropped 6.5-percent in just one-day last month.

　　Still, foreign investment in the mainland markets is growing.

　　The State Administration of Foreign Exchange says Qualified Foreign Institutional Investors, foreign companies which have been authorized to trade on the A-share market, pumped in 845 billion yuan into the markets in May.

　　For CRI, I'm Qian Shanming