The importance of technology to Asian indices therefore cannot
Asian indices no longer consist of the highly cyclical, old
economy companies of the 1990s: a mulch of national champion banks
and state-owned commodity companies. Today, information technology
accounts for one-third of the MSCI Asia ex-Japan index.
In fact, four out of
the five largest companies are technology names. Financials still represent
the second largest sector at 23 per cent. Yet this is down from fve years
ago, when technology only accounted for 18 per cent of the index,
signifcantly lagging fnancials at 25 per cent.
Much of this change is related to MSCI’s inclusion of US-listed
American Depositary Receipts (ADRs) in November 2015, which brought
in US-listed Asian tech stocks like Baidu and Alibaba into Asian indices.
Since that change, the weight of technology in MSCI Asia ex-Japan has
increased from 22 per cent to the current level of 33 per cent. This
represents an increase of an astonishing 44 basis points per month.