By Shen Hong and Michael Wursthorn
SHANGHAI — Index provider MSCI Inc. said it would quadruple the contribution of mainland Chinese companies’ to its benchmarks, a move that makes shares in Shanghai /zigman2/quotes/210598127/delayed CN:SHCOMP +0.31% and Shenzhen /zigman2/quotes/210598015/delayed CN:399106 +1.12% all but unignorable for many international investors.
While many asset managers own stakes in Chinese companies listed in Hong Kong or New York, such as Alibaba Group Holding Ltd. /zigman2/quotes/201948298/composite BABA -2.50% or PetroChina Co. /zigman2/quotes/205108732/composite PTR -0.98% , global investors have far less exposure to stocks listed on the mainland.
The decision is likely to pull tens of billions of dollars into China. The world’s second-largest economy is also set to enter a world bond index in April and a rival global stock index in June.
Late Thursday, MSCI /zigman2/quotes/202905332/composite MSCI -3.93% said it would follow through on its September proposal to increase the so-called inclusion factor of mainland companies in its widely tracked emerging-markets index to 20% from its previous cap of 5% over a three-step process starting in May. That will push the weighting of domestic Chinese stocks to 3.3% by November, when the process is set to be completed, from 0.7% now. Consulting firm Z-Ben Advisors expects the move to pull $66 billion into China’s $6.7 trillion domestic stock market.
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