KFM Weekly Investment Update: Friday, 04 July 2014

Local Market Summary

• Failed attempts by the PNG Prime Minister to stop the warrant of arrest issued on him has resulted in a submission of urgent application with the Supreme Court. Mr O’Neil’s lawyer applied for the injunction pending an appeal challenging the National Court‘s decision that dismissed the bid to stop the Prime Minister’s arrest. Accordingly, there is still some political uncertainty and risk due to these events.

• InterOil Corporation announced the sale of its PNG oil refinery and petroleum products distribution businesses to Singapore –based Puma Energy Group Pte for US$525.6m. The sale proceeds will provide additional capital to fund its upstream and LNG business.

• NBPOL, a producer of sustainable palm oil, said on Thursday that the group’s second quarter processed Fresh Fruit Bunches (FFB) was up 14.2% compared with the same period last year. FFB and oil production in the first half showed a significant improvement year-on-year and is in line with NBPOL market guidance.

• NGIP AGMARK Ltd earned a profit of K1.8m in 2013 compared to a loss of K5.6m the previous year. This was attributable to the sale of property in Lae, revenue from coffee and recovered levies from the Cocoa Board.

• City Pharmacy Ltd (CPL) group opened its K7m Hardware Haus this week with the concept of Do It Yourself (DIY). The Retail Complex Manager David Foreman said it has created new employment opportunities for Port Moresby citizens with CPL looking forward to engaging the community in a number of areas, learning centres, DIY products and the brand and products on offer.

• This weeks BPNG auctions in Treasury Bills was over subscribed by K15m. Both 182/364 days weighted average yield rates were unchanged from last week at 4.1% and 6.4% respectively.

• Over the week, PGK/AUD closed higher to 0.3% settling at 0.4393 while PGK/USD exchange rates ended the week 0.4% lower, settling at 0.4114.

• The KSi Index ended the week high by 1.3% to 3,765.9 while the KSi Home Index closed 0.2% low to 7,897.5

International Market Summary

• The U.S. employment picture improved in June, and numbers for May were upgraded, bringing the hiring rate for the past six months to its best level in eight years. Economists say the latest data indicate the U.S. recovery is now self-sustaining, adding to speculation that the Federal Reserve may raise interest rates sooner than previously expected.

• U.S. Fed Chair Yellen indicated a reluctance to use higher interest rates as a means to curb increasingly risky financial speculation. Yellen said rates should play primarily a macroprudential role while regulation is better suited to taming risk.

• A bid by Commonwealth Bank Chief Executive Ian Narev to defuse the financial planning scandal engulfing the bank by ”unreservedly” apologising and opening a compensation scheme to up to 400,000 customers has been dismissed by victims, consumer groups and corporate governance experts. Despite this, CBA shares closed stronger, boosted by attractive yields and hints that the RBA was open to cutting interest rates further.

• Gold was up 0.1% to U$1,320.70 while both Brent and Light Crude declined by 1.7% and 2.0% respectively.

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pdfKFM Weekly Investment Update: Friday, 04 July 2014

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