The operator of the stock indices MSCI intends to remove the strategy from the global indices. After this information appeared, its shares fell 0.8% in the aftermarket. Since the beginning of the year, the securities have already lost 20% of their value, so the supplier's decision added another pressure factor to the previous fall.
MSCI classified the strategy as a non-production structure with the characteristics of an investment fund. This classification means that the company is no longer considered within the indices as a normal corporate issuer. For shareholders, this is more important than the wording change itself: the exclusion could reduce money flow from passive strategies that focus on index composition.
It's not just about responding to quotes. The state of the index affects the availability of the securities for a certain part of the investors, and its loss creates a risk of a decrease in demand. So far there has been a pullback in the postmarket, and the further impact will depend on the extent to which the interest of passive participants in strategy stocks changes.