KFM Weekly Investment Update: Friday, 08 April 2016

Local Market Summary:

• The PNG Institute of National Affairs, Director Mr Paul Barker, stressed that the Government should refrain from imposing heavy restrictions on foreign investments but rather encourage them, as well as local investments, in order to generate employment and boost economic activity. Mr Barker said the Government should ensure that foreign companies are making a full contribution to the local economy while staying in compliance with local labour and tax laws, among other laws in the country

• Managing Director of Kumul Petroleum Holdings Limited, Mr Wapu Sonk said Petromin PNG Limited will transfer all of its petroleum assets to Kumul Petroleum including Petromin’s 0.2% stake in the PNG LNG, which it manages on behalf of the State since the beginning of LNG production. The transfer falls in line with the State’s reform in consolidating all its business interests into a more organised and single regime under Kumul Holdings

• The PNG government has given its approval for K7.0bn rice venture in Central Province. The Instruments were signed by the Governor-General Sir Michael Ogio and Agriculture and Livestock Minister, Tommy Tomscoll at the Government house. This project will be carried out by the Naima Agro Industry Limited which is expected to create 5,000 jobs

• The PNG Biomass Joint Venture between Oil Search Limited and Aligned Energy (Australia) will invest over K200.0m into the economy subsequently creating employment from the project in Markham Valley, Morobe province. The company is nearing the front end engineering design stage and is in the process of formulating a memorandum of agreement for all the stakeholders

• Oil Search Managing Director, Peter Botten, stated at a recent Credit Suisse Asian Investment Conference in Hong Kong that the company was set on achieving its forecasted production target between 27.5 and 29.5 million barrels of oil equivalent (mmboe) in 2016. Mr Botten said the company’s focus items for the year included the added value to mature oil fields in low price environment through optimising the operated production and ongoing focus on integrity, process safety and optimising facilities upside

• Furthermore, Mr Botten reaffirmed that the Papuan LNG project remains the next potential LNG development which, saw significant progress last year. Oil Search expects a final investment decision in 2018 preceded by early works

• Heduru Moni Limited (trading as Moni Plus), a licenced financial institution licensed by the Bank of Papua New Guinea, entered into a non-binding term agreement with Singapore-based holding company, Jaya Holdings to acquire Moni Plus. According to a filing, the term sheet will allow Jaya Holdings to buy Heduru Moni Limited for up to S$237.6m (about $175.5m) from shareholders

• The Nationwide Microbank Limited (MiBank) announced a net operating profit of K0.17m, up 60.0% from K0.12m in the previous corresponding period (pcp), for the year ended 31 December 2015. MiBank Chairman, Ray Clark, stated that this was the fifth successive year of profitability, showing a consistent record of success and sustainability

• This week’s BPNG auctions in Central Banks Bills were only offered for 28 days with an oversubscription of K449.6m out of a total of K375.0m on offer. The weighted average yield was 1.12%. KFM expects short term rates to remain flat around current levels

• This week’s BPNG auctions in Treasury Bills were undersubscribed by K300.6m out of K375.0m on offer indicating weak
appetite for the short term securities. Weighted average yields were 2.8% for 91 days, 4.8% for 182 days and 7.7% for 364 days

• The KSi Home Index ended the week up by 1.1% to close at 9,187.20 points, underpinned by an increase share price of Credit
Corporation (+9.1%) and Kina Securities (+14.3%) while the KSi Index was up by 0.9% to close at 4,036.62 points, underpinned by an increase in share price of Oil Search Limited (+2.1%)

International Market Summary:

• US equities fell as oil prices slid and worries about the global economy resurfaced. Minutes from the Fed’s March meeting released on Wednesday pointed to concerns about the central bank’s limited ability to tackle a global economic slowdown, reducing the odds of a rate increase before June

• Emerging-market stocks decline for the week since mid-February as currencies slumped as concern that global growth is slowing curbed demand for riskier assets. The Emerging market gauge MSCI Emerging Markets Index was down 2.2% for the week

• Gold has jumped almost 2.0% as the dollar fell to a 17-month low against the Japanese yen following minutes from the US Federal Reserve’s latest meeting and falling global shares fell rekindled investor appetite for safer asset. The metal was up 1.2% at US$ 1,238.40 an ounce

• The dollar firmed a little but languished close to 17-month lows against the yen, with the Japanese currency poised for weekly gains against its major counterparts despite verbal warnings from Japanese officials

• PGK/USD was down by 0.06% for the week ending at 0.3205 while PGK/AUD up 1.2% to close at 0.4255 as the AUD strengthened against the USD following the Fed’s decision to maintain rates, employing a cautious approach to monetary policy

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

pdfKFM Weekly Investment Update: Friday, 08 April 2016

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