Shares fall in light trading after index reweighting

Shares fell in more subdued trading following yesterday's billion-dollar MSCI rebalancing.

New Zealand shares fell in more subdued trading following yesterday's billion-dollar MSCI rebalancing, with A2 Milk Co and Synlait dropping while Air New Zealand gained.

The S&P/NZX50 Index declined 22.63 points, or 0.3 per cent, to 8,636.16. Within the index, 28 stocks fell, 14 rose and eight were unchanged. Turnover was $123 million.

Yesterday, index turnover was $1.26 billion as trading was boosted by the rebalancing of MSCI's indices. James Smalley, investment adviser at Hamilton Hindin Greene, said a number of stocks were reverting to where they had been trading yesterday.

Synlait Milk, which was the best performer yesterday when it rose 5.1 per cent, today fell 2.6 per cent to $10.96.

A2 Milk was the worst performer, down 3.9 per cent to $10.45. The stock, which joined the MSCI's Global Standard index, dipped 0.1 per cent yesterday to $10.87. It has been on the decline since an earnings update last month disappointed some investors. Some 61.5 million shares in A2 changed hands yesterday, the heaviest trading day since 2012.

"Although the volume isn't huge today, it really must be continuing to be affected by the reweighting - that level of turnover in a stock takes a while to find its feet again," Smalley said.

"Two-thirds or three-quarters of the trading is done in Australia these days. We will be following Australia's leads, and the currency can have an impact: we've strengthened against the Aussie which will reduce the price over here."

Infratil dropped 13 cents, or 3.8 per cent, to $3.30, after giving up rights to a 10.75 cent dividend.

Air New Zealand was the best performer, up 3.8 per cent to $3.25. However, Smalley said the stock was "making back what it lost yesterday on heavy volume" when it fell 3.5 percent.

Meridian Energy rose 2.5 per cent to $3.06, Mainfreight gained 1.7 per cent to $27, and Fisher & Paykel Healthcare Corp advanced 1.5 per cent to $13.48.

With company reporting for the year ended March 31 now over, and the next slew of earnings not due until August, Smalley said investors will pay attention to potential regulatory changes in the power sector or fuel market, with power companies like Meridian, Trustpower and Contact Energy - which are often held by retail investors for their yield - and Z Energy making up a large part of the index.

"We've all seen the effect regulatory action can have, even though we're going through a period where stock-specific news might be light, you'd still want to keep an eye on the broader macro environment," Smalley said.