Contact's inclusion on MSCI now looking unlikely - Forsyth Barr

Contact Energy's inclusion in the MSCI index is in doubt. Photo / File

Brokers Forsyth Barr say Contact Energy's inclusion in the influential MSCI NZ Index is now looking unlikely, contrary to market speculation.

"It appears unlikely Contact Energy will enter the MSCI NZ Index as further analysis of MSCI's convoluted index inclusion rules indicate the hurdle is higher than first thought," Forsyth Barr said in a research note.

As it stands, the index has just seven constituent New Zealand companies.

"For an eighth New Zealand company to enter the MSCI NZ Index it needs to have a market capitalisation of 0.575 times the Global Minimum Size Reference on the pricing day.

"We calculate Contact's current hurdle price is about $8.60 and with the 10 business day pricing period starting today (Monday) it appears unlikely that Contact will make the cut at this index review," it said.

"Whether Contact is in the MSCI index or not does not change our view that Contact offers better value than the other electricity stocks," Forsyth Barr said.

Contact shares last traded at $7.71, down one cent from Friday's closing level.