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Global Fund Managers Watch Alibaba's Earnings

On Wednesday, August 12, Alibaba (NYSE:BABA) -- one of China's premier internet companies -- will report its quarterly earnings. They will command more attention than one might suspect by global fund managers.

After learning that MSCI refused to include China's mainland A-shares in its global indices in June, many observers thought the issue was over. Yes, there was a general sense that the A-shares would be included, and perhaps before next June's formal review. However, with the strong direct and indirect intervention to arrest the slide in share prices, this does not seem likely anytime soon.

Yet the issue is far from over. In a few months, MSCI will make some changes in the composition of its China indices. It will add more than a dozen technology Chinese companies to the (ARCA:EEM) Index. These will not be the A-shares, but American Depository Receipts (ADRs).

This is important. At present, MSCI's China indices are heavily...