According to Zhitong Finance APP, the Southbound 2x Short MSTR (07399) surged more than 11% in early trading. As of press time, it was up 11.40%, at HK$17.3, with a turnover of HK$2.0279 million.
On the news front, index operator MSCI determined that Strategy (MSTR.US), led by Saylor, along with several other companies, are more akin to investment funds in nature, and therefore decided to remove them from its global indexes.
This move could curb passive fund inflows into these stocks. The market is concerned that indexes such as the Nasdaq 100 will follow MSCI's lead. It is worth noting that Strategy acknowledged in its quarterly report that index removal could weaken the company's stock price, liquidity, and future financing capabilities.
As of now, Strategy's mNAV stands at 1.08x, already at a low level in recent years. If index removal leads to reduced long-term buying, the premium continues to narrow or even turns into a discount to net asset value, the equity issuance logic will shift from "accretive to earnings" to "dilutive to equity," and the financing flywheel will slow down significantly.
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