The Shanghai Composite Index stumbled 0.66 percent lower, or 20.33 points, to 3.075.14 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, slipped 1.20 percent, or 21.22 points, to 1,746.33.
"There was a lot of media hype around the MSCI inclusion".
Global index compiler MSCI included 226 China large-cap A shares on its MSCI Emerging Markets Index at the close of trading on Thursday.
Several companies have been dropped from the shortlist following trade suspensions or other legal issues, most notably ZTE Corp. and China Railway Group.
Finally, in June 2017, MSCI announced the partial inclusion this year following a fourth consultation with global investors, recognising China's efforts to reform its capital markets.
MSCI is consulting with its clients on the matters of Brazil, India, South Korea and Turkey market access and plans to release the results of those consultations at the end of this year. "Compared to $70-80bn daily turnover of A-shares market, the impact is considered minimal", he said.
But MSCI is being cautious: Chinese A-shares will initially represent only about 0.39 percent of the emerging market index's weighting and the level is expected to remain miniscule for a long time.
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"However, more institutional investors may bring a rational mentality to the stock trading behaviour and worldwide standards of corporate governance", he said.
But FIIs that sell mutual funds and other products which track MSCI indices will most likely begin purchasing shares of the relevant companies to stay in step with the U.S. index compiler. However, some companies were excluded because they are now under stock trading suspension imposed by the mainland regulator, the index provider said in a webcast last night.
In a research report earlier this month, Credit Suisse analysts estimated an initial fund inflow of US$22 billion due to the inclusion.
The inclusion of China A-shares in the indices has been a much discussed topic in the investment community, with a number of fund managers launching China A-share focused mutual funds this year.
Foreign investment in Chinese shares has been on the rise, but remains relatively small.
Chinese stocks slid on Friday as USA tariffs reignited fears of a global trade war, overshadowing China A-shares' long-awaited inclusion in MSCI's benchmark market indexes which had been expected to draw a surge of foreign inflows in coming months.
"Global institutional investors are now underweighted in Chinese assets".
Because MSCI's indices are used as the benchmark for trillions of pounds worth of assets, the newly included Chinese shares will start to see extra investment flow their way.