Market close: Blow for a2 Milk as it falls out of MSCI World Index

A2 Milk closed at $6.22, down 17c or 2.66 per cent. Photo / 123RF

Dairy nutrition company a2 Milk took another blow – this time falling out of the influential MSCI World Index – as the New Zealand sharemarket stuttered to a near 1 per cent fall.

The S&P/NZX 50 Index closed down 118.75 points or 0.91 per cent to 12,908.15. It finished the week with a fall of nearly 1.3 per cent and is down more than 2 per cent for the year to date – below the previous worst-performing year of 2011, when the index dropped 1.04 per cent.

There were 79 gainers and 49 decliners over the whole market on strong volume of 40.89 million share transactions worth $176.67 million. The market will take on its 186th stock when transtasman infrastructure services provider Ventia lists next Friday afternoon. Ventia employs 25,000 people and has more than 400 sites in Australia and New Zealand.

The individual trading was dominated by global marketer a2 Milk. It fluctuated between an intraday high of $6.39 and low of $5.90 before closing at $6.22, down 17c or 2.66 per cent on trade of 4.02m shares worth $24.87m.

Because of this year's share price drop and its lower market capitalisation (now $4.62 billion), a2 Milk will be removed from the MSCI New Zealand Index on November 30, and it won't be replaced.

This leaves Fisher and Paykel Healthcare, Auckland International Airport, Spark, Meridian, Ryman Healthcare and Mercury Energy on the index.

One analyst said passive funds will need to sell up to 80 million a2 Milk shares before the end of the month as they rebalance their holdings. The removal was a surprise but there was a lot of short covering and those investors will be relieved.

Greg Main, Jarden Wealth Management adviser, said the move was another short-term negative for a2 Milk but it had to carry on and focus on its core business.

He said there did not seem to be rhyme or reason why the market keeps falling.

"We have been under-performing all year, and we are a market with more interest rate-sensitive and low growth stocks than overseas.

"Maybe the market is still looking over its shoulder at inflation and what the Reserve Bank does. It was the more growth-oriented stocks that fell today," Main said.

Two heavyweights also got pummelled. Fisher and Paykel Healthcare fell $1.40 or 4.38 per cent to $30.53 on trade worth $22.45m; and Mainfreight was down $2.85 or 3.05 per cent to $90.65.

Pushpay Holdings plunged 13c or 8.13 per cent to $1.47, its lowest level this year after hitting $1.52 on January 20. Tourism Holdings was down 5c to $2.85, and Smartpay Holdings fell 4c or 4.76 per cent to 80c.

Utilties investor Infratil increased 7c to $8.23 after reporting a record surplus of $1.08 billion, with $1.015b coming from the Tilt Renewables sale. Operating earnings (ebitdaf) for the six months ending September were $253.6m, up 28.2 per cent. Infratil did slightly adjust its ebitdaf forecast for the year ending March from $505m-$550m to $500m-$530m.

Specialised electronics manufacturer Rakon surged 11c or 7.43 per cent to $1.59 after upgrading its full-year operating earnings (ebitda) guidance to $44m-$49m, from $39m-$44m, because of a strong order book and less supply chain risk. Rakon has climbed from 15c on March 24 last year and neared its high of $1.62 achieved last month.

Synlait Milk rose 13c or 3.88 per cent to $3.48; Vulcan Steel was up 11c to $8.02; Restaurant Brands gained 22c to $15.30; Turners Automotive increased 8c or 1.86 per cent to $4.39; AMP collected 3c or 2.5 per cent to $1.23; and Heartland Group Holdings picked up 5c or 2.17 per cent to $2.35.

Retailers Briscoe Group increased 12c to $6.92, and Hallestein Glasson gained 11c to $7.11 as shops and malls are in full swing in Auckland. Serko rose 18c or 2.3 per cent to $8.01, and Scales Corporation was up 14c or 2.64 per cent to $5.44.

Contact Energy told the market its bookbuild for $225m worth of green bonds has been completed and they will carry a 4.33 per cent interest rate for the first five years. Genesis named FRV Australia as its solar generation joint venture partner with the aim of delivering enough power to run 10,000 households or 185,000 electric vehicles each year.

Contact gained 8c to $7.94; Genesis declined 6c or 1.89 per cent to $3.12; Vector was down 4c to $3.92; Trustpower shed 10c to $7.40; and Meridian gained 3c to $4.86.

The Warehouse Group, up 5c to $4.10, reported a 14.6 per cent fall in sales to $630.7m in the 13 weeks ending October compared with the same period last year because of the latest Covid lockdown. Online business grew 118.2 per cent to $190m, representing 30.1 per cent of group sales.