Consultation on Enhancements to
the Coverage of the MSCI Global
Investable Market Indexes
October 2014 (Revised Version)

msci.com
msci.com©2014 MSCI Inc. All rights reserved.

Background: Missing Coverage Currently a portion of the global investable equity opportunity set is not covered by the
MSCI Global Investable Market Indexes (GIMI) due to eligibility rules related to thecountry of listing In particular, companies with no local listing are not eligible for the MSCI GIMI
 This mainly impacts three countries:
 China (US listed) Russia (UK and US listed)

Examples: Hong Kong (Singapore listed)

Alibaba (China)
US listing
No local listing

UK listing

Americas time‐zone

No local listing

EMEA time‐zone

Asia‐Pacific time‐zone

X5 (Russia)©2014 MSCI Inc. All rights reserved.

msci.com2

Background: Missing Coverage (cont.)
Overview: Current MSCI coverage
Location of liquid listing

Local
Global investable
equity opportunity
set

FULLY
COVEREDSame time‐zone: Not local PARTIALLY(example: X5)
COVERED (*)
Overseas(example: Alibaba)

NOT
COVERED

Missing coverage:
MSCI proposes toaddress this issue(*) only ADRs/GDRs are covered, and only for companies which also have an illiquid local listing

Definitions:•

Local: Listing in the company’s country of classification•

Same time‐zone: Listing in the same time‐zone as the company’s country of classification•

Overseas: Listing in a different time‐zone than the company’s country of classification©2014 MSCI Inc. All rights reserved.

msci.com3

Initial Feedback and Additional Proposal On September 4, 2014, MSCI proposed to include companies trading in a substantiallydifferent time‐zone only in the MSCI Global Indexes, while continuing excluding themfrom the MSCI Country and selected MSCI Composite Indexes For example, under this proposal, Alibaba would be added to the MSCI ACWI and MSCI Emerging
Markets Indexes, while still being excluded from the MSCI China Index Feedback from market participants thus far suggests that potential operational
complexities resulting from management of multiple time‐zones may not be as
challenging as initially anticipated by MSCI Consequently, MSCI is extending the consultation to a second proposal, under which
companies classified in Emerging Markets, listed in a different time‐zone (e.g., Alibaba)
would be added not only to the MSCI Global Indexes, but also the MSCI Country Indexes As the inclusion of companies classified in Developed Markets and listed in a different time‐zone
would only marginally increase the coverage of the MSCI World Index, MSCI proposes that suchcompanies continue to be ineligible for the MSCI Indexes

 MSCI welcomes feedback from the investment community on the proposed
methodological changes by November 28, 2014
 This consultation may or may not lead to any changes to the MSCI Indexes or
methodologies©2014 MSCI Inc. All rights reserved.

msci.com4

Summary of the Two Proposals
same time‐zone

Not local+(fully covered)

Local

Initial Proposal (1)Overseas
Country Indexes (DM)MSCI USA Index[…]=

Country Indexes (EM)MSCI China Index[…]

Country Overseas Indexes (DM)MSCI USA Overseas Index[…]+

Country Overseas Indexes (EM)MSCI China Overseas Index[…]

Global Country Indexes (DM)MSCI Global USA Index[…]=

MSCI World
Global Country Indexes (EM)MSCI Global China Index[…]
MSCI EM Index
MSCI ACWI

same time‐zone

Overseas+(fully covered)

Not local+

EM only(fully covered)

Local

New Proposal (2)DM + EMCountry Indexes (DM)MSCI USA Index[…]

Country Indexes (DM)MSCI USA Index[…]=

Country Indexes (EM)MSCI China Index[…]=

MSCI WorldCountry Indexes (EM)MSCI China Index[…]
MSCI EM Index
MSCI ACWI©2014 MSCI Inc. All rights reserved.

msci.com5

Illustration of the Two Proposals – China
Proposed: MSCI China Indexes (non‐exhaustive)

Listing

ListingType

Company

Listing

Listing
Type

China Mobile

Hong Kong

Stock

China Mobile

Hong Kong

Stock

ICBC

Hong Kong

Stock

ICBC

Hong Kong

Stock

Alibaba

New York

ADR

Baidu

New York

ADR

Local

Company

Overseas

Local

Current: MSCI China Index (non‐exhaustive)

Index inclusion
Proposal 1

Proposal 2

MSCI China
Index

MSCI China
Index

MSCI China
Overseas

MSCI China
Index

 Alibaba / Baidu – Overseas listing (New York) Proposal 1: Eligible for MSCI China Overseas Index
 Proposal 2: Eligible for MSCI China Index
 Note that under both proposals, Alibaba / Baidu would be eligible for inclusion in the MSCI EM
Index©2014 MSCI Inc. All rights reserved.

msci.com6

Managing Time‐Zones – MSCI Data Delivery Schedule
ACWI (6:15pm EST, 12:15am (+1d) CET and 6:15am (+1d) HK time)
EAFE (2:30 pm EST, 8:30pm CET and 2:30am (+1d) HK time)AP (12:30pm EST, 6:30pm CET
and 12:30am (+1d) HK time)©2014 MSCI Inc. All rights reserved.

msci.com7

Managing Time‐Zones – Impact on Delivery of MSCI Data Inclusion of companies classified in Emerging Markets and listed in a different time‐zone(proposal 2) would result in earlier market open and later market closure times forselected Emerging Markets MSCI Country and Composite Indexes Real‐time calculation window for selected EM indexes would be extended to include trading
hours of multiple time‐zones
 End‐of‐day delivery of selected EM country and composite indexes from the Asia Pacific (AP)region (e.g., MSCI China Index and related composite indexes) would change from 12:30am (+1d)
to 6:15am (+1d) Hong Kong Time There would be no change of delivery time for Developed Markets Indexes (e.g. MSCIEAFE Index)
 Also, there would be no change of delivery time for any country or composite index fromthe Americas region©2014 MSCI Inc. All rights reserved.

msci.com8

Coverage Enhancements

msci.com
msci.com©2014 MSCI Inc. All rights reserved.

9

Details of the Two Proposals
 In order to enhance the global coverage in its indexes, MSCI proposes to consider
companies with no liquid local listing as eligible for index inclusion:
Proposal 1
 Companies with listings in the same time‐zone would
become eligible for the country, regional and global indexes In addition, MSCI would create the MSCI Country Overseas
Indexes that would cover companies with overseas (i.e.
different time‐zone) listings
 The MSCI Country Overseas Indexes would be added to theexisting MSCI Country Indexes in order to construct the
global indexes

Proposal 2
 Companies classified in Emerging Markets
with listings in any time‐zone would become
eligible for the country, regional and global
indexes Companies classified in Developed Markets
with listings solely in the same time‐zone
would become eligible for the country,
regional and global indexes In addition, to be eligible, listings should be: In an eligible stock exchange as defined in the MSCI Global Investable Market Indexes methodology
 Example: for US listings, only NYSE, NASDAQ and NYSE MKT stock exchanges would be considered In the same or a higher investment universe
 For companies classified in Developed Markets, only listings in Developed Markets would be considered For companies classified in Emerging Markets, both Developed Markets and Emerging Markets listings
would be considered©2014 MSCI Inc. All rights reserved.

msci.com10

Overview of Impact
Types of companies added to the MSCI Equity Universe

Type of Company

Impact on
ACWI / FM?

Companies with no local listing but with liquid non‐local listingYes See page 12

Companies with illiquid local listing but with liquid non‐local listingYes See page 13

Companies in countries not covered by MSCI with liquid non‐local listingsNo See page 14©2014 MSCI Inc. All rights reserved.

msci.com11

Impact: Companies with No Local Listing Liquid non‐local listings would be considered for companies with no local listings
Simulation: Top 30 companies with no local listing added to the MSCI Equity Universe
Company Name
Alibaba Group
Baidu
Jardine Strategic
Jardine Matheson
Jd.ComPrada
Hongkong Land
Vimpelcom
Dairy Farm Int'l
Thai Beverage Pcl
Check Point Software
Vipshop Holdings
Netease Com
Polyus Gold Intl
Ctrip Com Intl
Qihoo 360 Tech
United Company Rusal
X5 Retail Group
Ternium SA
Eurasia Drilling
Samsonite International
Damac Real Est Dev
Mail Ru Group
Genpact
L'Occitane Intl
New Oriental Educat
Bitauto Holdings
Soufun Holdings
Sina Corp
Icon

Full Mkt
Ctry of
Cap Classification
216,699CN
59,615
CN
40,174HK
40,154
HK
33,561
CN
17,780IT16,281
HK
15,178RU
14,008HK
13,568TH
13,128IL
12,006
CN
11,466
CN
9,398
RU
8,493
CN
8,366
CN
7,940
RU
5,712
RU
5,075
MX
4,550
RU
4,422
US
4,304
AE
4,197
RU
3,849
IN
3,564
FR
3,425
CN
3,374
CN
3,369
CN
3,145
CN
3,142
IE

Ctry of
Listing
US
US
SG
SG
US
HK
SG
US
SG
SG
US
US
US
GB
US
US
HK
GB
US
GB
HK
GB
GB
US
HK
US
US
US
US
US

Ctry of
Incorporation
Cayman Islands
Cayman Islands
BermudaBermudaCayman Islands
Italy
BermudaBermudaBermudaThailandIsraelCayman Islands
Cayman Islands
JerseyCayman Islands
Cayman Islands
JerseyNetherlands
Luxembourg
Cayman Islands
Luxembourg
U.A.E.
British V. I.
BermudaLuxembourg
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Ireland

Listing
Type
ADR
ADR
Stock
Stock
ADR
Stock
Stock
ADR
Stock
Stock
Stock
ADR
ADR
Stock
ADR
ADR
Stock
GDR
ADR
GDR
Stock
GDR
GDR
Stock
Stock
ADR
ADR
ADR
Stock
Stock

Index Eligibility
Proposal 1
Proposal 2
MSCI China Overseas Index
MSCI China Index
MSCI China Overseas Index
MSCI China Index
MSCI Hong Kong Index
MSCI Hong Kong Index
MSCI Hong Kong Index
MSCI Hong Kong Index
MSCI China Overseas Index
MSCI China Index
MSCI Italy Overseas Index
NA
MSCI Hong Kong Index
MSCI Hong Kong Index
MSCI Russia Overseas Index
MSCI Russia Index
MSCI Hong Kong Index
MSCI Hong Kong Index
MSCI Thailand Index
MSCI Thailand Index
MSCI Israel Overseas Index
NA
MSCI China Overseas Index
MSCI China Index
MSCI China Overseas Index
MSCI China Index
MSCI Russia Index
MSCI Russia Index
MSCI China Overseas Index
MSCI China Index
MSCI China Overseas Index
MSCI China Index
MSCI Russia Overseas Index
MSCI Russia Index
MSCI Russia Index
MSCI Russia Index
MSCI Mexico Index
MSCI Mexico Index
MSCI Russia Index
MSCI Russia Index
MSCI USA Overseas Index
NA
MSCI U.A.E. Index
MSCI U.A.E. Index
MSCI Russia Index
MSCI Russia Index
MSCI India Overseas Index
MSCI India Index
MSCI France Overseas Index
NA
MSCI China Overseas Index
MSCI China Index
MSCI China Overseas Index
MSCI China Index
MSCI China Overseas Index
MSCI China Index
MSCI China Overseas Index
MSCI China Index
MSCI Ireland Overseas Index
NA

All market caps are in USD million. Data as of August 21, 2014 (October 17, 2014 for Alibaba Group) Eleven of the top 30
companies are Chinesecompanies listed
overseas (in New York),
and would be eligible for
the MSCI China Overseas
Index (proposal 1) or the
MSCI China Index(proposal 2)
 Jardine Strategic,
Jardine Matheson,
Hongkong Land andDairy Farm Int’l would
be eligible for the MSCI
Hong Kong Index using
Singapore listings (sametime‐zone)©2014 MSCI Inc. All rights reserved.

msci.com12

Impact: Companies with Illiquid Local Listing Liquid non‐local listings would be considered for companies with illiquid local listings
 Currently, only ADRs/GDRs in same time‐zone are considered for such companies
Simulation: Top 10 companies with illiquid local listing added to the MSCI Equity Universe

Company Name
Melco Crown Entertainment
Yandex A
Dragon Oil
Polymetal International
Constellium
Gran Tierra Energy
Imax Corp
Fortune Real Estate Inv.
Mdc Partners A
Novadaq Technologies

Local listing
Ctry of Listing 12M
Full Mkt
Ctry ofCtry of
Cap Classification Incorporation Listing Type ATVR
16,268HK
Cayman Islands HK
Stock
2%
7,472
RU
Netherlands
RU
Stock
1%
4,857
IE
Ireland
IE
Stock
2%
3,439
RU
Jersey
RU
Stock
4%
2,973
FR
Netherlands
FR
Stock
0%
1,878
US
USA
US
Stock
8%
1,828
CA
Canada
CA
Stock
12%
1,762
SG
Singapore
SG
Stock
8%
993
CA
Canada
CA
Stock
1%
823
CA
CanadaCA
Stock
1%

Ctry of Listing
Listing Type
US
ADR
US
Stock
GB
Stock
GB
Stock
US
Stock
CA
Stock
US
Stock
HK
Stock
US
Stock
US
Stock

Non‐local listing
12M
Index Eligibility
ATVR
Proposal 1
Proposal 2
111% MSCI Hong Kong Overseas Index
NA
165%
MSCI Russia Overseas Index
MSCI Russia Index
35%
MSCI Ireland Index
MSCI Ireland Index
102%
MSCI Russia Index
MSCI Russia Index
22%
MSCI France Overseas Index
NA
37%
MSCI USA Index
MSCI USA Index
36%
MSCI Canada Index
MSCI Canada Index
31%
MSCI Singapore Index
MSCI Singapore Index
38%
MSCI Canada Index
MSCI Canada Index
32%
MSCI Canada Index
MSCI Canada Index

All market caps are in USD million. Data as of August 21, 2014

 Yandex A (Russia) – Overseas listing (US)  eligible for MSCI Russia Overseas Index (proposal 1) or
MSCI Russia Index (proposal 2)
 Dragon Oil (Ireland) – Same time‐zone listing (UK)  eligible for MSCI Ireland Index©2014 MSCI Inc. All rights reserved.

msci.com13

Impact: New Countries Covered by MSCI Non‐local listings would be considered for the creation of new country indexes Under both proposals, new standalone country indexes could be created if they meet all theminimum size/liquidity requirements outlined in the MSCI Global Investable Market Indexes
methodology
 Minimum two companies meeting the requirements for the Frontier Markets Standard Index OR
 Minimum one company meeting the Frontier Markets Standard Index requirements and two companies meeting the FrontierMarkets Small Cap Index requirements

 Based on simulations, Papua New Guinea and Panama would meet the requirements
Simulation: Papua New Guinea (Standard Index)
Company Name
Oil SearchInteroil Corp

Full Mkt
Cap
11,9293,021

Ctry of
Listing
AU
US

Ctry of
Incorp.
P.N.G.
CanadaListing
Type
Stock
Stock

All market caps are in USD million. Data as of August 21, 2014

 The two Papua New Guinea constituents would
be non‐local listings
 The simulation assumes that overseas listings(US) would be considered

Simulation: Panama (Standard Index)
Full Mkt Ctry of Ctry of
Cap Listing Incorp.
Company Name
Copa Holdings A
4,259
USPanamaBanco Latinoamericano
973
USPanamaGrupo Assa
832 Panama Panama
GB Group
802 Panama Panama

Listing
Type
Stock
Stock
Stock
Stock

All market caps are in USD million. Data as of August 21, 2014

 Two of the four Panama constituents would be
non‐local listings©2014 MSCI Inc. All rights reserved.

msci.com

14

Discussion Points: Coverage Enhancements
 Under proposal 2, companies classified in Developed Markets with a listing in a different
time‐zone would continue to be excluded from the MSCI Indexes Based on simulations, six companies that would be added to the MSCI World Index
under proposal 1 would continue to be excluded under proposal 2
 Simulated weight of excluded companies: 0.09% of MSCI World Index
Company Name
Prada
Melco Crown Entertainment
Check Point Software
Samsonite International
Icon
Constellium

Full Mkt
Ctry of
Cap Classification
17,780IT16,268HK
13,128
IL
4,422
US
3,142
IE
2,973
FR

All market caps are in USD million. Data as of August 21, 2014

Ctry of
Listing
HK
US
US
HK
US
US

Ctry of
Incorporation
Italy
Cayman Islands
IsraelLuxembourg
IrelandNetherlands

Listing
Type
Stock
ADR
Stock
Stock
Stock
Stock

Simulated weight in MSCI World Index
under proposal 1
0.01%
0.02%
0.03%
0.01%
0.01%
0.01%
0.09%

 Is it appropriate to have such companies still missing from the coverage of the MSCI
Global Investable Market Indexes?
 Alternative: Should MSCI cover such companies in their country of listing? (e.g. Prada in MSCI
Hong Kong Index)©2014 MSCI Inc. All rights reserved.

msci.com15

Listing Selection

msci.com
msci.com©2014 MSCI Inc. All rights reserved.

16

Listing Selection: Priority Rules
 Under both proposals, several listings per security may be included in the MSCI Equity
Universe, but only one listing per security may be included in the MSCI Indexes Therefore, priority rules are needed for the listing selection
 MSCI proposes to give priority to local listings compared to non‐local listings
Current methodology

Proposed methodology

Priority rules for listing selection:

Priority rules for listing selection:

1) Local1) Local2) ADRs / GDRs same time‐zone (*)2) Same time‐zone: not local(*) exception:‐ in Russia ADRs in New York may be eligible

 ADRs / GDRs can be selected only
if a local listing exists but is not
sufficiently liquid3) Overseas
 Non‐local listings can be selected only ifthere is no local listing or if the local listing
is not sufficiently liquid Same time‐zone listings have priority overoverseas listings (e.g. for a Russiancompany, a UK listing would have priority
over a US listing)©2014 MSCI Inc. All rights reserved.

msci.com17

Impact: Listing Replacements
 Based on simulations, replacements of non‐local listings by local listings would only
occur in the MSCI Russia Indexes
Current composition of the MSCI Russia Indexes
Listing type
Local (Moscow)
GDRs (London)
ADRs (New York)
Total

MSCI Russia Index#Const. FIF Mcap
Weight17 161,912
78.93%
4
33,37316.27%
1
9,857
4.80%
22 205,141 100.00%

MSCI Russia Small Cap Index#Const. FIF Mcap
Weight8
3,303
62.37%
3
1,731
32.68%
1
262
4.95%
12
5,296 100.00%

Replacements of non‐local listings by local listings in the MSCI Russia Indexes
Company Name
Novatek
MagnitMobile Telesys
MegafonAfk Sistema
Tmk
Ojsc Lsr Group
Pharmstandard
MechelCurrent
Index
Standard
Standard
Standard
Standard
Standard
Small Cap
Small Cap
Small Cap
Small Cap

Type
GDR
GDR
ADR
GDR
GDR
GDR
GDR
GDR
ADR

Full Mcap
37,77228,36819,982
19,654
14,765
2,414
2,112
1,660
1,103

Local listing:
FIF Mcap 12‐month ATVR 12‐month ATVR Replace?
11,331
97.6%
39.3%
Yes
15,603
91.1%
66.4%
Yes
9,991
28.5%
46.6%
Yes
2,948
139.2%
3.3%
No
5,168
116.0%
30.6%
Yes
604
97.6%
7.2%
No
845
74.2%
8.1%
No
415
23.2%
4.6%
No
350
60.2%
315.5%Yes

All market caps are in USD million. Data as of August 21, 2014

 All DRs except Megafon would be replaced by local listings in the MSCI Russia Index
 The two ADRs currently included in the MSCI Russia Indexes would be replaced by local listings©2014 MSCI Inc. All rights reserved.

msci.com18

Discussion Points: Listing Selection
 Would it be appropriate to give priority to local listings compared to non‐local listings in
the same time‐zone?
 Alternative: Should both listings have the same priority (i.e. the most liquid listing would be included)?

 Should MSCI replace liquid DRs with less liquid local listings (MSCI Russia Indexes)?
 Alternative: Should the replacements be made only when local listings become more liquid?

©2014 MSCI Inc. All rights reserved.

msci.com19

Additional Discussion Points

msci.com
msci.com©2014 MSCI Inc. All rights reserved.

20

Ineligible “Global” Companies
 In some cases, companies with a global footprint (i.e. no significant link to any specificcountry) are not eligible for the MSCI Indexes This is notably the case of companies listed in the US but incorporated outside of the US and not filing
10K/10Q annual/quarterly reports with the Securities and Exchange Commission (SEC)“Global” companies not eligible for inclusion in the MSCI Indexes

US:
Top 5
Other

Company Name
Nxp Semiconductors N V
AmdocsAercap Holdings Nv
Taro Pharmaceutical Inds
Teekay Corp
Genting Hong Kong
Purecirc

Full Mkt
Ctry of
Cap Classification
15,282
US
7,344
US
5,569
US
6,622
US
4,169
US
3,213
1,646

HK
GB

Ctry of
Listing
US
US
US
US
US

Ctry of
Incorporation
Netherlands
Guernsey
Netherlands
IsraelMarshall Islands

Listing
Type
Stock
Stock
Stock
Stock
Stock

HK
GB

BermudaBermuda

Stock
Stock

All market caps are in USD million. Data as of August 21, 2014

 Should such companies continue to be ineligible for the MSCI Indexes?
 Alternative 1: cover such companies in their country of listing? (e.g. NXP Semiconductors in MSCI USA Index)
 Alternative 2: cover such companies in another country? (e.g. Taro Pharmaceutical eligible for MSCI Israel
Index)
 Alternative 3: cover such companies only in the MSCI ACWI Index? (i.e. not in country / regional indexes)©2014 MSCI Inc. All rights reserved.

msci.com21

Variable Interest Entity (“VIE”) Structures
 Variable Interest Entity (“VIE”) Structures are currently eligible for inclusion in the MSCI
Global Investable Market Indexes Example: Tencent Holding is currently included in the MSCI China Large Cap Index

 VIE refers to a structure whereby an entity that is wholly or partially foreign owned has
control over an operating company which holds the necessary licenses to operate in
restricted/prohibited sectors (e.g., telecom, internet)
 VIE has long been a popular structure for foreign investors in sectors that are subject to China's
investment restrictions

 Under the proposal, large Chinese companies with VIE structures (such as Alibaba andBaidu) would become eligible for the MSCI Indexes Is it appropriate to continue considering VIEs as part of the eligible investment opportunity set
for the MSCI China Index / MSCI Emerging Markets Index?

©2014 MSCI Inc. All rights reserved.

msci.com22

China Overseas Considerations
 MSCI currently provide the MSCI Overseas China Indexes which reflect the performanceof US and Singapore‐listed Chinese companies
 Under proposal 1, new MSCI China Overseas Indexes would be created In addition to US‐listed Chinese companies, the new MSCI China Overseas Indexes would also
cover Chinese companies listed outside of the Asia‐Pacific time‐zone, especially in the UK However, the new MSCI China Overseas Indexes would not cover the Singapore‐listed Chinesecompanies since they are already covered in the MSCI Singapore Indexes (as they are bothincorporated and listed in Singapore)
UK‐listed companies eligible for new MSCI China Overseas Indexes
Company Name
Green Dragon Gas
Cathay Intnl Hldg

Full Mkt Ctry of
Ctry of
Cap Listing Incorporation
1,059 UK Cayman Islands
217 UK
BermudaAll market caps are in USD million. Data as of August 21, 2014

Index Eligibility
MSCI China Overseas Index
MSCI China Overseas Index

Companies not eligible for new MSCI China Overseas Indexes (top 3)
Company Name
Yangzijiang Shipbuild
Yanlord Land Group
Cosco Corp Singapore

Full Mkt Ctry of Ctry of
Cap Listing Incorp.
3,548 SGSG
1,825 SGSG
1,317 SG
SGCurrent Index
MSCI Singapore Index
MSCI Singapore Small Cap Index
MSCI Singapore Small Cap Index

All market caps are in USD million. Data as of August 21, 2014

 If new MSCI China Overseas Indexes are created, should MSCI stop maintaining theexisting MSCI Overseas China Indexes?
 Singapore‐listed Chinese companies would only be available via the MSCI Singapore Indexes©2014 MSCI Inc. All rights reserved.

msci.com23

Country Classification: Discussion Cases
 As per MSCI’s current country classification framework, each company is classified in one
and only one country When a company is incorporated in the country where it has its primary listing, the company isclassified in that country In some cases, this may lead to companies being classified in a country to which they have nomaterial linkage
Examples of potentially misclassified companies
Company Name
Yangzijiang Shipbuild
Evraz Group
Kazakhmys
Yanlord Land Group
Cosco Corp Singapore

Full Mkt Ctry of Ctry of
Cap Listing Incorp.
3,548
SG
SG
2,710 UKUK
2,158 UK
UK
1,825
SG
SG
1,317
SG
SG

Current Index
MSCI Singapore Index
MSCI UK Small Cap Index
MSCI UK Small Cap Index
MSCI Singapore Small Cap Index
MSCI Singapore Small Cap Index

Comment
Linkage to China
Linkage to Russia
Linkage to Kazakhstan
Linkage to China
Linkage to China

All market caps are in USD million. Data as of August 21, 2014

 Should MSCI cover such companies in their country of linkage?
 Example: Evraz Group could be covered in the MSCI Russia Indexes Alternatively, to avoid turnover, should MSCI consider such treatment only for new companies(IPOs)?
©2014 MSCI Inc. All rights reserved.

msci.com24

Appendix

msci.com
msci.com©2014 MSCI Inc. All rights reserved.

25

Impact of the Proposal: MSCI World Index (Proposal 1)
Country
USA
United Kingdom
Japan
CanadaFranceSwitzerland
Germany
Australia
Spain
Hong Kong
SwedenNetherlands
Italy
Singapore
Denmark
Belgium
Finland
NorwayIsraelIreland
Austria
Portugal
New Zealand
MSCI World Index#Const.
618
108
311
95
73
38
54
69
22
39
30
24
26
29
13
11
12
10
9
4
8
4
6
1,613

Current
FIF Mcap
18,726,791
2,875,538
2,769,057
1,464,501
1,305,831
1,211,115
1,184,592
1,090,286
476,376415,675
407,594353,164
327,040
199,666
198,715
164,023
117,230
116,476
71,351
39,64730,71625,38818,27833,589,053

MSCI Country Indexes
MSCI Country
Additions
New
Overseas Indexes
MSCI Global Country Indexes
Weight #Const. FIF Mcap #Const.
FIF Mcap #Const. FIF Mcap #Const.
FIF Mcap Weight55.75%‐‐
618
18,726,7911
4,422
619 18,731,213 55.68%
8.56%
‐
‐
108
2,875,538‐‐
108
2,875,538
8.55%
8.24%
‐
‐
311
2,769,057‐‐
311
2,769,057
8.23%
4.36%
‐
‐
95
1,464,501‐‐
95
1,464,501
4.35%
3.89%
‐
‐
73
1,305,831
1
1,933
74
1,307,763
3.89%
3.61%
‐
‐
38
1,211,115‐‐
38
1,211,115
3.60%
3.53%
‐
‐
54
1,184,592‐‐
54
1,184,592
3.52%
3.25%
‐
‐
69
1,090,286‐‐
69
1,090,286
3.24%
1.42%
‐
‐
22
476,376‐‐22
476,376
1.42%
1.24%
2
22,19541437,870
15,694
42443,564
1.32%
1.21%
‐
‐
30
407,594‐‐30
407,594
1.21%
1.05%
‐
‐
24
353,164‐‐24
353,164
1.05%
.97%
‐
‐
26
327,040
1
4,445
27
331,485
.99%
.59%
‐
‐
29
199,666‐‐
29
199,666
.59%
.59%
‐
‐
13
198,715‐‐
13
198,715
.59%
.49%
‐
‐
11
164,023‐‐
11
164,023
.49%
.35%
‐
‐
12
117,230‐‐
12
117,230
.35%
.35%
‐
‐
10
116,476‐‐10
116,476
.35%
.21%
‐
‐
9
71,351
1
10,503
10
81,853
.24%
.12%
1
2,428
5
42,07513,142
645,218
.13%
.09%
‐
‐
8
30,716‐‐
8
30,716
.09%
.08%
‐
‐
4
25,388‐‐4
25,388
.08%
.05%
‐
‐
6
18,278‐‐
6
18,278.05%
100.00%3
24,623
6
30,138
1,622 33,643,814 100.00%

All market caps are in USD million. Data as of August 21, 2014©2014 MSCI Inc. All rights reserved.

msci.com26

Impact of the Proposal: MSCI Emerging Markets Index(Proposal 1)
Country
China
Korea
TaiwanBrazilSouth Africa
India
MexicoRussiaMalaysia
Indonesia
ThailandTurkeyPolandChile
Colombia
Philippines
GreeceUnited Arab Em.
Qatar
Peru
Egypt
Czech RepublicHungary
MSCI EM Index#Const.
141
103
101
73
49
68
30
22
43
30
29
25
23
20
14
20
10
9
10
3
4
3
3
833

Current
FIF Mcap
816,463631,800
498,986
480,905
319,419
283,076
222,453
206,673
161,888
110,656
95,881
68,323
66,931
59,76742,90541,90429,061
23,08020,12018,306
9,605
9,357
8,370
4,225,930

MSCI Country Indexes
MSCI Country
Additions
New
Overseas Indexes
MSCI Global Country Indexes
Weight #Const. FIF Mcap #Const.
FIF Mcap #Const. FIF Mcap #Const.
FIF Mcap Weight
19.32%‐‐
141
816,463
22 158,135
163
974,598 22.06%
14.95%‐‐
103
631,800‐‐
103
631,800 14.30%
11.81%‐‐
101
498,986
1
1,323
102
500,309 11.32%
11.38%
12,129
74
483,033‐‐74
483,033 10.93%
7.56%
‐
‐
49
319,419‐‐49
319,419
7.23%
6.70%
‐
‐
68
283,076
12,887
69285,963
6.47%
5.26%
1
1,269
31
223,722‐‐31
223,722
5.06%
4.89%
6
12,00928
218,6833
8,815
31
227,497
5.15%
3.83%
‐
‐
43
161,888‐‐43
161,888
3.66%
2.62%
‐
‐
30
110,656‐‐30
110,656
2.50%
2.27%
1
4,749
30
100,629‐‐30
100,629
2.28%
1.62%
‐
‐
25
68,323‐‐25
68,323
1.55%
1.58%
‐
‐
23
66,931‐‐
23
66,931
1.51%
1.41%
‐
‐
20
59,767‐‐20
59,767
1.35%
1.02%
‐
‐
14
42,905‐‐14
42,905
.97%
.99%
‐
‐
20
41,904‐‐20
41,904
.95%
.69%
‐
‐
10
29,0611
1,371
11
30,432
.69%
.55%
‐
‐
9
23,080‐‐9
23,080
.52%
.48%
‐
‐
10
20,120‐‐10
20,120
.46%
.43%
‐
‐
3
18,306‐‐3
18,306
.41%
.23%
‐
‐
4
9,605
‐
‐
4
9,605
.22%
.22%
‐
‐
3
9,357
‐
‐
3
9,357
.21%
.20%
‐
‐
3
8,370
‐
‐
3
8,370
.19%
100.00%920,15528 172,531
870
4,418,616 100.00%

All market caps are in USD million. Data as of August 21, 2014 (October 17, 2014 for Alibaba Group)©2014 MSCI Inc. All rights reserved.

msci.com27

Impact of the Proposal: Additions / Turnover (Proposal 1)
Developed Markets

Country
USA
United Kingdom
Japan
CanadaFranceSwitzerland
Germany
Australia
Spain
Hong Kong
SwedenNetherlands
Italy
Singapore
Denmark
Belgium
Finland
NorwayIsraelIreland
Austria
Portugal
New Zealand
MSCI World Index

Emerging Markets
MSCI Country
Indexes
Adds Turnover
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
2
5.07%
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1
5.77%
‐
‐
‐
‐
‐
‐
3

MSCI Country
Overseas Indexes
Total# ConstituentsAdds Turnover
1
‐
‐
‐
1
‐
‐
‐
‐
1
‐
‐
1
‐
‐
‐
‐
‐
1
1
‐
‐
‐
6
9
0.16%

All market caps are in USD million. Data as of August 21, 2014

Country
China
Korea
TaiwanBrazilSouth Africa
India
MexicoRussiaMalaysia
Indonesia
ThailandTurkeyPolandChile
Colombia
Philippines
GreeceUnited Arab Em.
Qatar
Peru
Egypt
Czech RepublicHungary
MSCI EM Index

MSCI Country
Indexes
Adds Turnover
‐
‐
‐
‐
‐
‐
1
.44%
‐
‐
‐
‐
1
.57%
6
5.49%
‐
‐
‐
‐
1
4.72%
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
9

MSCI Country
Overseas Indexes
Total# ConstituentsAdds Turnover
22
‐
1
‐
‐
1
‐
3
‐
‐
‐
‐
‐
‐
‐
‐
1
‐
‐
‐
‐
‐
‐
28
37
4.36%

All market caps are in USD million. Data as of August 21, 2014 (October 17, 2014 for Alibaba Group)©2014 MSCI Inc. All rights reserved.

msci.com28

Impact of the Proposal: MSCI World Index (Proposal 2)Country
USA
United Kingdom
Japan
CanadaFranceSwitzerland
Germany
Australia
Spain
Hong Kong
SwedenNetherlands
Italy
Singapore
Denmark
Belgium
Finland
NorwayIsraelIreland
Austria
Portugal
New Zealand
MSCI World Index#Const.
618
108
311
95
73
38
54
69
22
39
30
24
26
29
13
11
12
10
9
4
8
4
6
1,613

Current
FIF Mcap
18,726,791
2,875,538
2,769,057
1,464,501
1,305,831
1,211,115
1,184,592
1,090,286
476,376415,675
407,594353,164
327,040
199,666
198,715
164,023
117,230
116,476
71,351
39,64730,71625,38818,27833,589,053

Additions
Weight #Const. FIF Mcap #Const.
55.75%
‐
‐
618
8.56%
‐
‐
108
8.24%
‐
‐
311
4.36%
‐
‐
95
3.89%
‐
‐
73
3.61%
‐
‐
38
3.53%
‐
‐
54
3.25%
‐
‐
69
1.42%
‐
‐
22
1.24%
2
22,195
41
1.21%
‐
‐
30
1.05%
‐
‐
24
.97%
‐
‐
26
.59%
‐
‐
29
.59%
‐
‐
13
.49%
‐
‐
11
.35%
‐
‐
12
.35%
‐
‐
10
.21%
‐
‐
9
.12%
1
2,428
5
.09%
‐
‐
8
.08%
‐
‐
4
.05%
‐
‐
6
100.00%3
24,623
1,616

New
FIF Mcap
18,726,791
2,875,538
2,769,057
1,464,501
1,305,831
1,211,115
1,184,592
1,090,286
476,376
437,870
407,594353,164
327,040
199,666
198,715
164,023
117,230
116,476
71,35142,07530,71625,38818,27833,613,676

Weight55.71%
8.55%
8.24%
4.36%
3.88%
3.60%
3.52%
3.24%
1.42%
1.30%
1.21%
1.05%
.97%
.59%
.59%
.49%
.35%
.35%
.21%
.13%
.09%
.08%
.05%
100.00%Turnover
‐
‐
‐
‐
‐
‐
‐
‐
‐
5.07%
‐
‐
‐
‐
‐
‐
‐
‐
‐
5.77%
‐
‐
‐
0.07%

All market caps are in USD million. Data as of August 21, 2014©2014 MSCI Inc. All rights reserved.

msci.com29

Impact of the Proposal: MSCI Emerging Markets Index(Proposal 2)Country
China
Korea
TaiwanBrazilSouth Africa
India
MexicoRussiaMalaysia
Indonesia
ThailandTurkeyPolandChile
Colombia
Philippines
GreeceUnited Arab Em.
Qatar
Peru
Egypt
Czech RepublicHungary
MSCI EM Index#Const.
141
103
101
73
49
68
30
22
43
30
29
25
23
20
14
20
10
9
10
3
4
3
3
833

Current
FIF Mcap
816,463631,800
498,986
480,905
319,419
283,076
222,453
206,673
161,888
110,656
95,881
68,323
66,931
59,76742,90541,90429,061
23,08020,12018,306
9,605
9,357
8,370
4,225,930

Additions
Weight #Const. FIF Mcap #Const.
19.32%
22 158,135
163
14.95%‐‐
103
11.81%
1
1,323
102
11.38%
1
2,129
74
7.56%
‐
‐
49
6.70%
1
2,887
69
5.26%
1
1,269
31
4.89%
9
20,824
31
3.83%
‐
‐
43
2.62%
‐
‐
30
2.27%
1
4,749
30
1.62%
‐
‐
25
1.58%
‐
‐
23
1.41%
‐
‐
20
1.02%
‐
‐
14
.99%
‐
‐
20
.69%
1
1,371
11
.55%
‐
‐
9
.48%
‐
‐
10
.43%
‐
‐
3
.23%
‐
‐
4
.22%
‐
‐
3
.20%
‐
‐
3
100.00%37 192,686
870

New
FIF Mcap
974,598
631,800
500,309
483,033
319,419
285,963
223,722
227,497
161,888
110,656
100,629
68,323
66,931
59,76742,90541,90430,432
23,08020,12018,306
9,605
9,357
8,370
4,418,616

Weight22.06%
14.30%
11.32%
10.93%
7.23%
6.47%
5.06%
5.15%
3.66%
2.50%
2.28%
1.55%
1.51%
1.35%
.97%
.95%
.69%
.52%
.46%
.41%
.22%
.21%
.19%
100.00%Turnover16.23%
‐
.26%
.44%
‐
1.01%
.57%
9.15%
‐
‐
4.72%
‐
‐
‐
‐
‐
4.51%
‐
‐
‐
‐
‐
‐
4.36%

All market caps are in USD million. Data as of August 21, 2014 (October 17, 2014 for Alibaba Group)©2014 MSCI Inc. All rights reserved.

msci.com30

Simulated List of Additions to the MSCI World Index
IMPACT: PROPOSAL 1
Security Name
JARDINE MATHESON HLDGSCHECK POINT SOFTWARE TECH LTD
HONG KONG LAND LTD.
MELCO CROWN ENTMT LTD - ADR
PRADA SPASAMSONITE INTERNATIONAL SA
ICON PLCDRAGON OILCONSTELLIUM HOLDCOCountry ofCountry ofClassification Listing

Country ofIncorporation

HONG KONG SINGAPORE BERMUDAISRAELUSA
ISRAEL
HONG KONG SINGAPORE BERMUDA
HONG KONG USA
CAYMAN ISLANDSITALY
HONG KONG ITALYUSA
HONG KONG LUXEMBOURG
IRELANDUSA
IRELANDIRELANDUK
IRELANDFRANCEUSA
NETHERLANDSIMPACT: PROPOSAL 2

ListingType

FIF
Mkt Cap

Weight in
MSCI Country Index

Weight in
MSCI Global Country Index

Weight in
MSCI Country Index

STOCK
STOCK
STOCK
ADR
STOCK
STOCK
STOCK
STOCK
STOCK

14,054
10,503
8,141
5,694
4,445
4,422
3,142
2,428
1,933

3.21%
NA
1.86%
NA
NA
NA
NA
5.77%
NA

3.17%
12.83%
1.84%
1.28%
1.34%
0.02%
6.95%
5.37%
0.15%

3.21%
NA
1.86%
NA
NA
NA
NA
5.77%
NA

Notes: The Market Size‐Segment Cutoffs were set at one half of the Developed Markets Standard Global Minimum Size Reference
Should there be any changes to the MSCI Global Investable Market Indexes methodology following the consultation, the final methodology and the resulting simulated impact on the MSCI World Index would bemade publicly available in advance of the implementation.
All market caps are in USD million. Data as of August 21, 2014©2014 MSCI Inc. All rights reserved.

msci.com31

Simulated List of Additions to the MSCI Emerging Markets
Index
IMPACT: PROPOSAL 1

Security NameBAIDU INC ADR
ALIBABA GROUP HLDG ADS
JD.COM INC
CTRIP.COM INTERNATIONAL LTD - ADR
NETEASE COM INC - ADR
QIHOO 360 TECHNOLOGY CO LTDYANDEX N.V.
VIPSHOP HOLDINGS LTD
THAI BEVERAGE PUBLIC C
MAIL RU GROUP
SINA CORPEURASIA DRILLING CNEW ORIENTAL ED & TECH GRP INC - ADR
GENPACT LIMITEDJUMEI INTERNATONAL HOLDING LTDYOUKU TUDOU INC ADR
X5 RETAIL GROUP GDR (USD)
LEJU HOLDINGS LTD
COSAN LTD
SOHU COM INC
VIMPELCOM LTD - ADR
POLYMETAL INTL PLC
BITAUTO HOLDINGS ADR
21VIANET GROUP INC
DRYSHIPS INC
HIMAX TECHNOLOGIES INC - ADR
TERNIUM SA - ADR
POLYUS GOLD INTERNATIONAL LTD
HOME INNS & HOTELS MGMT INC - ADR
TAL EDUCATION GROUP ADR
GLOBALTRANS INVESTMENT
58.COM INC
UNITED COMPANY RUSAL L
SEASPAN CORP
AUTOHOME INC
51JOB INC - ADR
SOUFUN HOLDINGS ADR

IMPACT: PROPOSAL 2Country ofCountry ofClassification Listing

Country ofIncorporation

ListingType

FIF
Mkt Cap

Weight in
MSCI Country Index

Weight in
MSCI Global Country Index

Weight in
MSCI Country Index

CHINA
CHINA
CHINA
CHINA
CHINA
CHINA
RUSSIACHINATHAILANDRUSSIACHINA
RUSSIA
CHINA
INDIA
CHINA
CHINA
RUSSIACHINA
BRAZILCHINA
RUSSIARUSSIACHINA
CHINA
GREECETAIWANMEXICORUSSIA
CHINA
CHINA
RUSSIACHINA
RUSSIA
CHINA
CHINA
CHINA
CHINA

CAYMAN ISLANDSCAYMAN ISLANDSCAYMAN ISLANDSCAYMAN ISLANDSCAYMAN ISLANDSCAYMAN ISLANDSNETHERLANDSCAYMAN ISLANDSTHAILANDBRITISH V. I.
CAYMAN ISLANDSCAYMAN ISLANDSCAYMAN ISLANDSBERMUDACAYMAN ISLANDSCAYMAN ISLANDSNETHERLANDSCAYMAN ISLANDSBERMUDAUSA
BERMUDAJERSEYCAYMAN ISLANDSCAYMAN ISLANDSMARSHALL ISLANDSCAYMAN ISLANDSLUXEMBOURG
JERSEYCAYMAN ISLANDSCAYMAN ISLANDSCYPRUSCAYMAN ISLANDSJERSEYMARSHALL ISLANDSCAYMAN ISLANDSCAYMAN ISLANDSCAYMAN ISLANDS

ADR
ADR
ADR
ADR
ADR
ADR
STOCK
ADR
STOCK
GDR
STOCK
GDR
ADR
STOCK
ADR
ADR
GDR
ADR
STOCK
STOCK
ADR
STOCK
ADR
ADR
STOCK
ADR
ADR
STOCK
ADR
ADR
GDR
ADR
STOCK
STOCK
ADR
ADR
ADR

59,61528,171
18,459
8,493
6,880
6,693
6,351
6,003
4,749
3,147
3,145
2,958
2,912
2,887
2,579
2,566
2,285
2,145
2,129
1,887
1,670
1,548
1,518
1,379
1,371
1,323
1,269
1,128
1,021
950
944
867
794
764
714
700
674

NA
NA
NA
NA
NA
NA
NA
NA
4.72%
1.44%
NA
1.35%
NA
NA
NA
NA
1.04%
NA
0.44%
NA
NA
0.71%
NA
NA
NA
NA
0.57%
0.52%
NA
NA
0.43%
NA
NA
NA
NA
NA
NA

6.12%
2.89%
1.89%
0.87%
0.71%
0.69%
2.79%
0.62%
4.72%
1.38%
0.32%
1.30%
0.30%
1.01%
0.26%
0.26%
1.00%
0.22%
0.44%
0.19%
0.73%
0.68%
0.16%
0.14%
4.51%
0.26%
0.57%
0.50%
0.10%
0.10%
0.41%
0.09%
0.35%
0.08%
0.07%
0.07%
0.07%

6.12%
2.89%
1.89%
0.87%
0.71%
0.69%
2.79%
0.62%
4.72%
1.38%
0.32%
1.30%
0.30%
1.01%
0.26%
0.26%
1.00%
0.22%
0.44%
0.19%
0.73%
0.68%
0.16%
0.14%
4.51%
0.26%
0.57%
0.50%
0.10%
0.10%
0.41%
0.09%
0.35%
0.08%
0.07%
0.07%
0.07%

USA
USA
USA
USA
USA
USA
USA
USA
SINGAPORE
UK
USA
UK
USA
USA
USA
USA
UK
USA
USA
USA
USA
UK
USA
USA
USA
USA
USA
UK
USA
USA
UK
USA
HONG KONG
USA
USA
USA
USA

Notes: The Market Size‐Segment Cutoffs were set at one half of the Emerging Markets Standard Global Minimum Size Reference
Should there be any changes to the MSCI Global Investable Market Indexes methodology following the consultation, the final methodology and the resulting simulated impact on the MSCI Emerging Markets
Index would be made publicly available in advance of the implementation.
All market caps are in USD million. Data as of August 21, 2014 (October 17, 2014 for Alibaba Group)©2014 MSCI Inc. All rights reserved.

msci.com32

Listing Selection: Rules for New Securities
 Proposed listing selection rules for a security not included in the MSCI Indexes:
Security XYZ

Any investable (*) local listing?

YES

Select mostliquidNO
Any investable (*) non‐local listing in same time‐zone?

YES

Select mostliquidYES

Select mostliquidIncluded in the
MSCI
Investable
UniverseNO
Any investable (*) overseas listing?

(*) An “investable” listing is a listing that meets all the investability requirements defined in the MSCI Global Investable Market
Indexes Methodology (i.e. size, liquidity, foreign room…)©2014 MSCI Inc. All rights reserved.

msci.com33

Listing Selection: Rules for Existing Securities
 Proposed listing selection rules during Index Reviews for a constituent of the MSCI
Indexes:
YES
YES
Current listing used
for security XYZSelect most liquid listing
within highest priority

Any investable listingwith higher priority? (**)

NO

Keep current listing

Liquid? (*)

NO
Select listing based on priority rules (**)(**) Priority rules (reminder):(*) meets the liquidity requirements to be maintained in the MSCI Investable Equity Universe

1) Local2) Same time‐zone: not local
3) Overseas

 Hence, contrary to the current methodology, a non‐local listing included in the MSCI
Indexes may be replaced by a less liquid (but investable) local listing©2014 MSCI Inc. All rights reserved.

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MSCI 24 Hour Global Client Service
Americas

Europe, Middle East & Africa

Asia Pacific

Americas1.888.588.4567 (toll free)Cape Town+27.21.673.0100

China North

10800.852.1032 (toll free)Atlanta+1.404.551.3212

Frankfurt+49.69.133.859.00

China South

10800.152.1032 (toll free)

Boston+1.617.532.0920

Geneva+41.22.817.9777

Hong Kong+852.2844.9333

Chicago+1.312.706.4999

London+44.20.7618.2222

Seoul

00798.8521.3392 (toll free)Monterrey+52.81.1253.4020

Milan+39.02.5849.0415

Singapore

800.852.3749 (toll free)

New York+1.212.804.3901

Paris

0800.91.59.17 (toll free)

Sydney+61.2.9033.9333

San Francisco+1.415.836.8800

Taipei008.0112.7513 (toll free)São Paulo+55.11.3706.1360

Tokyo+81.3.5290.1555

Toronto+1.416.628.1007

clientservice@msci.com | www.msci.com

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Notice and Disclaimer
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