KFM Weekly Investment Update: Friday, 11 January 2019

Local Market Summary:

● According to Minister for Finance and Rural Development Hon. James Marape, the opening of 2019 Government Accounts has been deferred to next Monday 14 January 2019, to allow for tidying up of last year’s accounts. Mr Marape emphasized that the National Procurement Act was now in effect for the year,and called on the National Procurement Commission to make the legislation
work. He said under the new Act, local companies can propose for any infrastructural or goods and service-providing contract of up to K10.0m. And anything between K10m – K30m is for a joint local-foreign venture subject to evidences of that partnership provided

● Business Council of PNG Executive Director Douveri Henao said the USD$500.0m (K1.6b) sovereign bond did not fully relieved the shortages in foreign exchange (forex). He explained that the current portion of forex is not sufficient to relief the shortages due to the high number of imports and the government’s priority. He added that caution needs to be applied in order to utilize resources which can generate positive results

● PNG Customs has encouraged business houses to register their Intellectual Property Rights with PNG Customs Services. This was in response to recent concerns about illicit trade raised by manufacturers and business firms. Customs Chief Commissioner Ray Paul said the organization is in support of the establishment of Trade Taskforce and is currently reviewing legislation to
increase penalties to curb illicit trading in the country

● Independent Consumer and Competition Commission (ICCC) announced new reduced retail fuel prices for petrol, diesel and kerosene throughout PNG as of January 8. According to ICCC’s calculations, the decrease in the retail prices for the three petroleum products is mainly attributed to the decrease in the import parity prices for January, and the decrease in the domestic sea freight rates for the first quarter of 2019

● OSH announced establishment of US$300.0m (K953.0m) of corporate bilateral revolving credit facilities with three major banks which include Commonwealth Bank of Australia, Mizuho Bank and Sumitomo Mitsui Bank. Managing Director Peter Botten said with US$1.4b in cash and committed facilities at the end of September 2018,the firm has financial flexibility to facilitate growth opportunities in PNG and Alaska

● The operators of Frieda River Mining project, PanAust and Highlands Pacific has presented amended proposal for Development in Frieda River Project’s Mining Lease application with Mineral Resource Authority (MGR). The amended proposal included additional documents comprising of Employment and Training Plan, Landownership Study, Resettlement Plan, and Business
Development Supply and Procurement Plan. Other applications for mining tenements have also been submitted to MRA

● The existing secured loan facility agreement between Nautilus Minerals and Deep Sea Mining Finance Limited will be extended for 30 days to end in early February 2019 despite its January 8 due date. This comes after a statement release this week that Nautilus is in still in discussions to secure a US$5.0m (K16.8m) loan in order for the Nautilus group of companies to continue

● This week’s BPNG auction in Central Bank Bills were under-subscribed by K5.00m out of the total amount offered K387.50m. This indicated that there was a decrease in appetite for shorter dated securities. The weighted average yield for 28 days remained unchanged at 1.39% from the prior week. There were no bids for 63, 91 and 182 days.

● This week’s BPNG auction in Treasury Bills were over-subscribed by K96.88m out of the total amount offered K236.77m. This indicated that there was an increase in appetite for longer dated securities. The weighted average yield for 182 days was 4.71% and 273 days remained unchanged at 6.72% while 364 days down 0.03 points to 7.88 from the prior week. There were no bids for 63,
and 91 days.

● Kina Securities Index closed lower by 0.5% to end at 5,094.21 and Kina Securities Home Index ended higher by 0.1% to closed at 11,419.23 due to increase in share price of BSP by 0.10% or K10.27 from K10.26 in the previous week.

International Market Summary:

● Global markets this week were driven by renewed hopes that US/China trade talks in Beijing will lead to a truce between the two powerhouse economies.

● Major US stock indexes closed higher after Powell stated that the Fed’s balance sheet would be smaller. Dow Jones by 2.4%, S&P 500 by 2.6% and Nasdaq by 3.7% to end at 24,001.92, 2,596.64 and 6,986.07 points respectively

● European stock markets also closed higher. Britain’s FTSE closed higher by 1.5%, DAX by 1.4% and CAC 40 by 1.5% to end at 6,942.87, 10,921.59 and 4,805.66 respectively

● The hopes for the positive outcome of the US/China trade deal has buoyed Asian stock markets to close higher. Nikkei by 4.1%, Hang Seng by 3.9% and Shanghai by 1.5% to closed at 20,359.70, 26,628.79 and 2,552.78 respectively

● Australian indices followed global markets higher, with technology, oil stocks and resources leading the charge. The S&P 200 and S&P 50 closed higher by 2.8% and 2.5% at 5,774.58 and 5,595.80 points respectively

● Oil prices ended the week higher after financial markets were boosted by hopes that the United States and China may resolve their trade disputes, and as OPEC-led crude supply begin to tighten up. Both the Light Crude and Brent Crude were up by 9.5% and 7.8% to end at US$52.52 and US$61.50 respectively.

pdf KFM Weekly Investment Update: Friday, 11 of January 2019


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