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A2 to join MSCI main stock index, replacing Mercury

Tuesday 15th May 2018

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A review of global stock indices by MSCI will, as expected, add A2 Milk Co to the international investment advisor's main global index, with Mercury New Zealand to be removed.

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. 

A2 rose 2.6 percent to $13.30 yesterday, and the stock has gained 62 percent so far this year, rising for a couple of weeks as MSCI rumours have swirled.

"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. "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."

Mercury fell 0.8 percent to $3.155 yesterday, after announcing it has agreed to buy 19.99 percent of Tilt Renewables from the Tauranga Electricity Consumer Trust at a 24 percent premium, and has dropped 6.5 percent this year.

"For Mercury, I don't think there will be a huge move there, they had some big news yesterday about their strategy going forward and the market didn't receive that particularly well," Williamson said. 

The MSCI Global Micro Cap Index was also reviewed, with Serko joining while Briscoe Group, Delegat Group and Tourism Holdings left.

In Australia, dual-listed stock Michael Hill International dropped down from the small cap index to the micro cap index.

(BusinessDesk)

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