Inclusion of mainland China stocks a key consideration in MSCI index revamp

New York

PERU may be out. Pakistan may be in. And China could have more clout than it's ever had.

Adding mainland-traded Chinese stocks to its global indexes is the most consequential move MSCI would make as part of its annual review, the results of which will be unveiled on June 14. Other potential changes include adding Pakistan stocks to the gauge, while excluding Peruvian equities.

"Index changes have material effect on flows as well as what the investable universe is for investors globally," said Brendan Ahern, chief investing officer at KraneShares in New York.

Assets worth US$10.5 trillion are benchmarked to MSCI's indexes of which US$1.5 trillion are invested in the developing world, according to the New York-based firm. About US$36.9 billion are tied to emerging-market exchange-traded funds and US$435 million are in ETFs track…