MSCI excludes MicroStrategy (MSTR.US), and $2.8 billion of passive capital faces outflow

According to Woofun AI, the global stock index compiling agency Morgan Stanley Capital International (MSCI) has officially decided to remove MicroStrategy (MSTR.US) from the MSCI US Index. The adjustment will take effect after the US stock market closes on November 30. Affected by this news, although MicroStrategy rose 1.06% to close at $122.35 during the regular trading session, the stock price fell back to $120.28 in after-hours trading, a decrease of 1.7%.

The market focus quickly turned to the scale of passive capital withdrawals that could be triggered by the exclusion of the index. J.P. Morgan previously estimated that if MicroStrategy is excluded from the MSCI index, about $2.8 billion of passive investment capital will flow out; if other major index compilers such as the NASDAQ 100 take similar measures, the potential outflow may further increase by $8.8 billion.

Notably, these estimates are based on MSCI's original rule amendments last year, and are not the actual sell-off amounts decided in this final decision. According to data compiled by Woofun AI, there are currently about 13 million MSCI index-tracking funds holding MicroStrategy shares, accounting for 3.1% of the company's issued common shares. Based on the closing price of $122.35 on the 11th, the market value of these stocks is about 1.59 billion US dollars. As the exclusion measures take effect on November 30, ETFs and index funds that track the MSCI index will need to adjust their portfolios. It is expected that the trading volume and price volatility of MicroStrategy shares will increase around the effective date.

Although the exclusion of the index did not directly lead to the sell-off of Bitcoin, the pressure on MicroStrategy's capital chain is worth paying attention to. The company has long relied on issuing stocks and bonds to raise capital to buy BTC. If the stock price falls and the conditions for issuing new shares deteriorate, the scale of future coin purchases may be limited. It currently holds 85,000 364 BTC, with a total purchase cost of approximately US$64.16 billion and an average purchase price of US$75,456/piece. Between October 2 and 8, the company also purchased 1,036 BTC for a total amount of $81.8 million, with a recent average purchase price of $70,9012 per piece. Previously, MicroStrategy Chairman Michael Saylor and CEO Peng Lei opposed MSCI's new inclusion standards, arguing that it is unreasonable to treat companies holding digital assets the same as ordinary investment companies.

However, as early as October 15, MSCI established new standards to restrict non-operating enterprises from being included in the index. The aim is to exclude companies that mainly hold financial assets rather than actually conduct business by evaluating operating assets and financial conditions.

This index adjustment is not limited to micro-strategies. A total of 24 stocks were excluded from the US index announced by MSCI, including Bitcoin mining and artificial intelligence data center company IREN.US (IREN.US), while Modena (MRNA.US) was newly added to the index. In contrast, Japanese Bitcoin holding company MetaPlanet, which was previously listed as a provisional exclusion target, did not appear on the final Japan Index exclusion list. MSCI stated that this adjustment is based on data collected as of the price reference date of October 20, and that if major corporate events occur before the effective date of November 30, the adjustment results may change. Currently, MicroStrategy is still selected for other major indices such as the Nasdaq 100. This announcement only confirms that it has been removed from the MSCI index. It is uncertain whether other indices will follow the adjustments. J.P. Morgan's estimated outflow of an additional $8.8 billion is based on the premise that other indices may decide to exclude them separately.