Stocks in South Korea, Taiwan and India could bear the brunt of MSCI's decision to add 14 U.S.-listed Chinese companies to its Emerging Markets index.
The mainland currently holds a 23.9 percent share in the $3.5 trillion market-cap global benchmark, and that's set to widen to 26.2 percent by next year, following the addition of heavyweight tech names including Alibaba, Baidu and Qihoo 360 Technology.
MSCI will add the companies at half their December 1 free float-adjusted market capitalization—i.e. the value of the shares held by the public—and then include the remainder at its May 2016 semiannual index review.
Once the changes are fully implemented next year, around $7 billion could move into these American Depository Receipts (ADRs) as passive funds that track the MSCI index snap up the assets, according to widespread estimates.