MARKET CLOSE: Shares rise as hunt for yield continues; Meridian, Contact gain

New Zealand shares edged higher in a volatile global market as stocks paying relatively high dividends, such as Meridian Energy and Contact Energy, underpinned the bourse. Briscoe Group rose after it reported higher first-half earnings.

The S&P/NZX 50 Index advanced 17.66 points, or 0.3 percent, to 5665.88. Within the index, 26 stocks rose, 18 fell and five were unchanged. Turnover was $113 million.

New Zealand's benchmark index trades at a 6.7 percent gross dividend yield, and was underpinned by demand for income-paying investments, insulating it from offshore volatility, including concerns that China's economic growth is slowing. Stocks were weaker across Asia, with Japan's Nikkei 225 Index down 1.6 percent in afternoon trading while China's Shanghai Composite Index dropped 3.2 percent.

Stocks that are held for their dividend yield, such as property investors and utilities, gained. Contact advanced 1.8 percent to $5. Meridian increased 0.7 percent to $2.155. Auckland International Airport, the nation's busiest gateway, rose 1.5 percent to $4.85. Genesis Energy gained 0.8 percent to $1.865. Fletcher Building, the building supplies and construction firm, increased 0.6 percent to $7.35. Precinct Properties New Zealand gained 0.4 percent to $1.155.

"A little bit of nervousness is starting to build with China weaker today," said Grant Williamson, director at Hamilton Hindin Greene. "It's very mixed right across the board. The electricity producers are not looking too bad today. I think our high yields are certainly underpinning our market to a pretty good degree at the moment."

Outside the benchmark index, Briscoe Group advanced 1.4 percent to $2.99. The retail chain mounting a hostile takeover of Kathmandu Holdings lifted first-half profit 11 percent to $20.5 million, meeting guidance on improved margins and revealing it has picked up just 2.3 percent of the 80.1 percent of Kathmandu shares it doesn't already own.

"They just seem to keep producing earning increases every half," Williamson. "The Kathmandu takeover is probably a different situation. It doesn't look like that's going to succeed and Briscoes have pretty much dug their heels in on that one and puts it on the Kathmandu board to improve their performance after rejecting the Briscoe's offer."

Kathmandu shares were the worst performer on the benchmark index, dropping 4 percent to $1.46. The retailer's board rejected the Briscoe offer and have announced a review of its head office structure, which could cut up to 10 percent of top management employees in Australia and New Zealand in a bid to find earnings growth from the company.

Sky Network Television, the country's dominant pay television provider, led the benchmark index higher, up 2.7 percent to $4.88.

Telecommunications company Spark New Zealand fell 0.6 percent to $3.25.

(BusinessDesk)