HONG KONG—Stock-index compiler MSCI Inc. ejected a troubled Hong Kong solar-power company from its indexes, enabling some of the world's biggest investment managers to dispose of hundreds of millions of dollars they have locked up in the firm's shares.

The deletion of Hanergy Thin Film Power Group Ltd., announced Thursday, means funds that simply track MSCI's indexes of stocks can either write down their Hanergy holdings or sell them outside a formal exchange.

These so-called passive funds, including ones run by Vanguard Group and BlackRock Inc., have been left holding the shares since trading in Hanergy was suspended in May after losing half its market value in one day. Hong Kong's securities regulator has since extended the suspension indefinitely as it probes the finances of the solar-equipment manufacturer and its dealings with its privately held parent company in Beijing.

Although Hanergy's stock price has remained suspended at 3.91 Hong Kong dollars (50 U.S. cents) a share, their value dropped to as low as HK$1.32 in over-the-counter trading in the week after the halt, when six million shares were offloaded, according to data from FactSet. Guggenheim Partners, which held more than 100 million Hanergy shares as of February through its fund that tracks solar stocks, sold off all its shares in late May after a different underlying solar index it tracked removed Hanergy, a Guggenheim spokesman said.

MSCI is the latest of four major index compilers -- including the FTSE, Hang Seng and S&P -- to remove Hanergy, and its decision is effective Sept. 1. Funds holding the shares will first need to find a buyer. Whether the funds have lost money on the stock isn't known because it depends when they acquired shares and the price they can get from them. They may also choose to write off its value.

Hanergy was first included on MSCI indexes in 2012, when it hovered around 20 Hong Kong cents a share, but its price surged to more than HK$9 a share earlier this year, valuing the company at more than Sony Corp. and briefly making its owner, Li Hejun, the richest man in China.

Retail investors, including Hanergy employees, who bought the company's stock, may remain in limbo. Smaller shareholders can't afford to sell privately because fees would be prohibitive, according to Christopher Chen, an assistant professor of financial law at Singapore Management University.

"Retail investors are usually incapable of doing these kinds of deals," he said. "If you own just a few thousand shares, nobody will buy them ... the costs are too high."

Hanergy, BlackRock and Vanguard didn't immediately reply to emails seeking comment.

Hanergy plans to release its interim financial results Friday. The company said earlier this month that it might swing to a first-half net loss this year after it canceled billions of dollars in deals with its parent company.

The listed unit has proposed to Hong Kong's Securities and Futures Commission that it end all transactions with its parent to satisfy the investigation. Hanergy Thin Film has said that the extended suspension is "unfair and unreasonable." It later canceled a deal to buy as much as HK$50.51 billion in solar panels from its parent company over three years.

Its solar panels are based on so-called thin-film technology, which has the potential for lightness and flexibility. Thin film, which is less efficient than more-common panels based on crystalline silicon, hasn't caught on widely.

Write to Wayne Ma at wayne.ma@wsj.com

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(END) Dow Jones Newswires

August 27, 2015 07:55 ET (11:55 GMT)