Chinese smartphone maker Xiaomi and Tencent Music will be included in stock benchmarks this month, after MSCI parted with rivals by deciding to keep companies with controversial dual-class share structures in its widely-followed indices.
Such structures typically hand a company’s founders far more power than other shareholders and have drawn scrutiny in recent years. That prompted New York-based MSCI to conduct an 18-month review of whether such lopsided companies should be included in indices whose power to direct capital flows has strengthened in the last decade.
Dual-class structures have proved popular with US and Chinese entrepreneurs, as the unequal split in voting power allows founders to keep a tight grip on the strategic direction of companies when they go public. The additions of Xiaomi and Tencent Music are among the first with dual-class structures that MSCI has added to its benchmarks since finishing its review late last year.