A flood of institutional money is about to flow into stocks like Alibaba Group Holding and Baidu, according to Tobias Bland, CEO of Hong Kong-based exchange-traded fund (ETF) provider Enhanced Investment Products (EIP). One vehicle that investors can use to effectively ride this tide of money is a Hong Kong-listed instrument created by EIP called XIE Shares FTSE Chimerica ETF, he adds.

In the coming weeks, index provider MSCI will announce a basket of Chinese American Depositary Receipts (ADRs) to be included for the first time in its MSCI China Index and MSCI Emerging Markets Index. The selection will be based on criteria such as the company’s market capitalisation, free float and liquidity. When this happens, active and passive institutional investors such as mutual funds, ETFs and pension funds tracking or benchmarking against these indices would need to purchase the newly included underlying stocks.

MSCI’s decision to include Chinese ADRs was announced in January following the conclusion of its October 2014 market consultation to enhance coverage of overseas listed stocks. Prior to that, stocks listed in a time zone different from the company’s home country have been excluded from MSCI’s coverage. This raised eyebrows especially during last September’s US$25 billion ($34.7 billion) New York IPO of Alibaba as market participants noticed the glaring absence of the Chinese e-commerce giant from major indices.