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KFM Weekly Investment Update: Friday, 10 February 2017

Local Market Summary

• Prime Minister Peter O’Neill said during the 2017 back-to-business breakfast in Port Moresby that the government has been business-friendly over the past five years and it has sought to provide a strong level playing field for the business through fiscal policies that were transparent and sound. PM O’Neill also said that tax positions have not changed over the past five years and the outcome was to ensure certainty and stability for the business community

• Minister for Public Enterprises and State Investments Hon. William Duma launched the K600.0m Edevu Hydro Power project in Central Province. Hon Duma said, the project was a massive investment made by private developer, PNG Hydro Development Company and the government would fully support it to ensure people benefit. Meanwhile, the company signed a power purchase agreement with PNG Power (PPL) so they would produce electricity and sell to PPL

• The transaction advisory services agreement was signed between National Airport Corporation (NAC) and Asian Development Bank (ADB) to upgrade Jackson’s airport to see new airport feature through a public-private partnership. ADB country director Marcelo Minc said, ADB has been a key development partner to NAC for several years through the landmark Civil Aviation Development Investment Program. Through the transaction advisory support to NAC, ADB hoped to compliment the work

• PricewaterhouseCoopers (PwC) conducted the 2016 Asian-Pacific Economic Cooperation (APEC) CEO survey and gave brief findings during a breakfast event in Port Moresby. According to PwC, good regulations in any APEC economy were driving factors for countries within the APEC group to invest in. A partner with PwC, Jonathan Seeto, when presenting the findings, said the key around the survey was to know how growth was driven in APEC economies in that year

• The Independent Consumer and Competition Commission advised that fuel prices have slightly increased this month and this was attributed to the increased in the crude oil prices during the month of January. Petrol price increased by 7toea per litre to K3.23 from January. Diesel also went up by 6toea per litre to K2.62 and kerosene increased by 3toea to K2.38 from K2.35

• Newcrest Mining (NCM) announced a 10.0% increase in gold production for the fourth quarter in 2016. This was a result of higher mill and autoclave throughput, and improved recovery. NCM said in its December 2016 Report that this was partially offset by lower grade. Recovery was higher due to improve autoclave availability and utilisation following completion of the total plant shut in the September quarter

• According to a market release, Bank South Pacific (BSP) group’s chief financial officer (CFO) Johnson Kalo resigned. Meanwhile Eddie Ruha, BSP’s CFO of PNG will succeed Kalo as group CFO

• Kina Securities and NASFUND in a joint media conference formalised and signed the agreement as Kina will now become NASFUND’s Fund Administrator. The mandate was given to Kina following the announcement in October last year. This makes Kina PNG’s largest superannuation fund administrator and it will now administer K9.7 b (A$3.93 b) in Funds under Administration on behalf of more than 700,000 members

• The BPNG’s assessment of key macroeconomic indicators available that the Kina Facility Rate) for the month of February 2017 is maintained at 6.25%

• This week’s BPNG auctions in Central Bank Bills were offered for 28 days only with an over-subscription of K263.50m out of a total of K117.50m on offer. The weighted average yield was 1.14%

• This week’s BPNG auctions in Treasury Bills were over-subscribed by K19.95m out of the K267.65m on offer. Weighted average yields were 2.40% for 63 days, 2.54% for 91 days, 4.72 for 182 and 7.79% for 364 days

• Both the Kina Securities Index and Kina Securities Home Index remained unchanged for the week to close at 4,814.66 and 10,684.93 points respectively

International Market Summary

• US stocks reached new highs along with the greenback and bond yields rose following U.S. President Donald Trump’s announcement regarding taxes in the coming weeks. The Nasdaq advanced by 0.9% to end at 20,172.40 points, while the S&P 500 and Dow Jones were both up 0.5% to end at 2,307.87 and 5,715.18 points, respectively

• Asian stocks followed suit after U.S. stocks reached record highs, despite the decline in the yen and government bonds after Donald Trump’s widely anticipated tax plans. The Nikkei was up 2.4% to end at 19,378.93 points, Hang Seng (+2.3%) ended at 23,662.60 points and Shanghai (+1.9%) ended at 3,198.84 points

• European stocks climbed with some major companies such as France’s second-largest listed bank Societe Generle and oil major Total SA advancing after their corporate results. Shares in Societe Generale rose 2.0% after the bank reported better than the expected income and similarly the oil giant Total SA gained 0.8% on the fourth quarter net profits

• Australian shares edged higher supported by fresh highs off Wall Street and the Reserve Bank of Australia’s quarterly monetary policy revealing an optimistic long-term outlook. The S&P/ASX 200 was up 1.8% to end the week at 5,720.61 points

• The Australian government bonds observed sharp rally for the third straight day, following firmness in the US Treasuries. This was due to the inversely moves on the yield of the benchmark bonds

• The corporate reporting season began this week which supported the S&P/ASX 50 to close higher at 0.92%. Investors were upbeat on the performance results and positive

• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD appreciated by 0.1% to end at 0.4124, while AUD/USD depreciated by 0.1% to end the week at 0.7640

Click the link below to view the full daily market report in PDF.

pdfKFM Weekly Investment Update: Friday, 10 February 2017

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