Passive funds sell millions of Contact and Meridian shares

The S&P/NZX 50 Index fell 36 points, or 0.3%, to 13,012.19. Turnover was $227 million in an extended trading session.

Renewable electricity generators were responsible for the underperformance, falling as funds tracking the S&P Clean Energy Index rebalanced their portfolios.

The passive fund was responsible for pushing Contact and Meridian to massively stretched valuations last summer as a surge of demand for clean energy stocks was channelled into the two relatively illiquid stocks.

In April, the index builder changed the design of the portfolio to include many more stocks, sending the two NZ companies crashing back towards fundamental value.