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KFM Weekly Investment Update: Friday, 11 March 2016

Local Market Summary:

• Prime Minister Hon. Peter O’Neill opened four new oil storage tanks at Puma Energy’s Napanapa Refinery outside Port Moresby. Two tanks for crude storage and the other two for storage of refined products. Mr O’Neill said companies like Puma Energy and others have confidence in the economy and thus continue to investment in PNG

• Resource and Investment Finance has reported that shortage of foreign exchange has prohibited the ability to finance the importation of equipment for some business in the county. Managing Director, Mr Brett Andrew said the shortage had affected their ability to finance the importation of equipment for clients

• National Superannuation Fund, CEO Ian Tarutia reported that the Fund had grown by 5.8% to K3.9bn. Mr. Tarutia said the results were achieved through careful management amidst a challenging investment environment. He further advised that given the subdued returns in 2015 the Fund would credit its members 4.0%

• Ok Tedi Mining, Managing Director and CEO Peter Graham said in a release that OTML is off to an encouraging start after a 7 month suspension following severe dry weather patterns that had restricted operations. The mine has already produced 10,000 metric tonnes of copper concentrate that is awaiting shipment to markets later in the month

• Telikom Chairman, Mr Mahesh Patel has confirmed Telikom PNG’s move to acquire EMTV was a strategic decision to position the company in a highly evolving and dynamic market. Telikom’s vision is to deliver television and video content via the fixed and broad band across PNG

• Bank South Pacific, CEO Mr Robin Fleming revealed in a statement that PNG’s largest bank would be pursuing a dual listing to “be able to get the share price to reflect the underlying performance”. Mr Fleming said that BSP had 10-15 key investors that had minimal capacity to participate in the market which resulted in a relatively stagnant share price and prompted moves to pursue a dual listing

• The Bank of PNG (BPNG) announced that the Kina Facility Rate (KFR) will be maintained at 6.25% for the month of March 2016. BPNG has maintained the KFR at 6.25% since March 2013

• This week’s BPNG auctions in Central Banks Bills were offered for 28 days only, with an oversubscription of K664.5m out of a total of K325.0 on offer. The weighted average yield was 1.18%. KFM expects short term rates to remain flat around current levels

• This week’s BPNG auctions in Treasury Bills were undersubscribed by K326.6m out of a total K425.9m on offer indicating weaker appetite for the short term securities. The weighted average yield for 91 days was 2.82%, 182 days was 4.76% and 364 days was at 7.71%

• The KSi Index ended the week up by 0.3% to close at 3,373.05 points, supported by an increase in share price of Oil Search (+0.7%), the KSi Home Index was also up by 0.1% supported by increase in share price of Bank of South Pacific (+0.1%) to end at 9,120.58 points

International Market Summary:

• US may be seeing the “first stirrings” of a long-awaited increase in inflation as the impact of a strong jobs market works its way through the economy, according to Stanley Fischer, the Fed’s vice-chairman

• European Central Bank put forward measures aimed at bolstering the Eurozone’s fragile economy but markets brushed off the efforts, raising questions about whether it and other central banks still have the tools to bolster weakening growth and inflation after years of easy-money policies

• Asia equities recover from early dip in post-ECB trading; stocks, commodities and bond yields are higher as the dust settles from the European Central Bank’s monetary bazooka blast. Following an ultimately upbeat Asia session, the pan-European Stoxx 600 equity index is up 1.5% at the open as US index futures suggest the S&P 500 will gain 0.8% to 2,006

• China’s stocks headed for a weekly loss as suspected state intervention failed to revive confidence among investors in the world’s worst-performing equity market. The Shanghai Composite Index declined by 3.2% at the break on turnover that was 38.0% below the average for this time of day. Financial and consumer-staples companies led losses before data that projected to show no let-up in the slowdown in industrial production and fixed-asset investment

• Australia’s S&P/ASX 200 closed the week 1.5% higher as the market shrugged off European growth concerns

• Oil headed for the longest run of weekly gains since May amid signs of rising U.S. fuel demand and easing crude production. Brent crude gained as much as 5.2% for the week and is set for a fourth weekly advance. Brent crude hit the US$40 mark once again amid reports a proposed meeting between Opec and non-Opec producers, to discuss a production cut, was unlikely to take place as Iran had not committed to participate (refer to graph)

• PGK/USD remained flat for the week, ending at 0.3265, PGK/AUD fell by 1.7% to close at 0.4355 caused by pick-up in AUD/USD to end at 0.7497

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

pdfKFM Weekly Investment Update: Friday, 11 March 2016

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