A review of global stock indices by MSCI has seen Fletcher Building shares gain after news the stock will remain on the international investment adviser's main global index, with A2 Milk rising on its planned entry and Mercury New Zealand dipping due to its planned removal.
The semi-annual review of the MSCI Equity Indexes saw A2 included in the MSCI Global Standard Index, exiting the MSCI Global Small Cap Index. Mercury will leave the standard index to join the small cap, alongside Restaurant Brands, Synlait Milk and Tourism Holdings. Fletcher Building, which was rumoured to be leaving the main index, will remain.
Investors who follow the indices are required to hold a certain amount of the stock, with changes causing selling and buying in new or departing stocks. The changes announced today will be implemented as of the close of May 31, which is expected to push up volumes on the stock exchange that day as exchange-traded funds which follow indices change their holdings.
About 20 minutes after the S&P/NZX 50 Index opened for trading this morning, Fletcher was up 3.9 percent to $6.62, A2 had gained 0.8 percent to $13.40 and Mercury was down 0.5 percent to $3.14.
"There obviously was a bit of concern that Fletcher Building might come out of the index, so it will likely be positive for them as there will have been a bit of selling ahead of that news," said Grant Williamson, director at Hamilton Hindin Greene, speaking before the market opened. "A2 was pretty well flagged and investors that need to get on board will have done so, but it could very well create some demand today."
