Rival FTSE Russell Indexes currently excludes Alibaba and Baidu from well-known ETFs, including the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets ETF by assets, and the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China country-specific ETF.
S&P Dow Jones Indices was the first of the major index providers to allow for the inclusion of Alibaba in its global benchmarks. The index provider announced the U.S.-listed Chinese stock inclusion to its benchmarks prior to the Alibaba IPO and the stock has since appeared in ETFs that track S&P indices such as the SPDR S&P China ETF (NYSEArca: GXC). Among its top holdings, GXC includes a 6.5% position in BABA, 4.5% in BIDU and 1.8% in JD.
Looking ahead, MSCI is still thinking about adding China A-shares, which trade on mainland Shanghai and Shenzhen stock exchanges, into its benchmark indices. By adding the A-shares, the MSCI Emerging Markets Index could see China’s weight jump to 40% from roughly 29%.
FTSE Russell Indexes has already taken steps to add Chinese A-shares to its benchmarks. The index provider has stated that China A-shares will make up 32% of the FTSE Emerging Markets Index as the indexer incrementally adds on exposure. [A First For Broad Emerging Market ETFs]
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