MSCI announced it will add several overseas-listed Chinese shares like Alibaba and Baidu to its emerging markets index with the companies likely to see a major boost. Meg Teckman reports.
Some Chinese tech stocks are about to get a big boost. New York-listed Internet giants Alibaba and Baidu, along with a dozen others, are set to be included in the MSCI Emerging Markets Index from December. This will be the first time the index provider will allow overseas-listed companies in specific country benchmarks. And is likely to attract a potential 70 billion dollars' worth of flows into these stocks in the next six months. The addition of more tech companies is reflecting the change in focus for the Chinese economy, says Manishi Raychaudhuri of BNP Paribas: (SOUNDBITE) (English) MD & ASIA PACIFIC EQUITY STRATEGIST, BNP PARIBAS, MANISHI RAYCHAUDHURI, SAYING: "I think the broader direction in which MSCI is trying to go is, number one: to move away from the state-owned enterprises and the usual old economy stocks that dominate the current front-line indices, and to bring in more of new economy and privately owned companies. Which is the right way to approach the transforming Chinese economy. Because after all, they want to make the equity indices a reflection of what's going on in the economy." The index already includes major player Tencent, which is listed in Hong Kong and is the highest weighted stock in the China index. However Mainland China-traded companies are still being left out. MSCI decided not to include Chinese A shares in its indexes in June. ENDS