KFM Weekly Investment Update: Friday, 12 August 2016

Local Market Summary

• Prime Minister Hon. Peter O’Neil said that the Government could not participate in the bidding process for the acquisition of InterOil Corporation by Exxon Mobil because of the current cash flow problem and also the price being too high. However, both companies are aware that the Government will exercise its right under the Oil and Gas Act that enables it to a 22.5% share

• Minister for Trade Commerce and Industry Hon. Richard Maru has called on the Fijian Government to lift its ban on PNG products. According to Hon. Richard Maru, Fiji has imposed trade restrictions on PNG for a while now and failure of Fiji to give a satisfactory reason will result in PNG pulling out of the Melanesian Spearhead Group

• Moreover, Hon. Maru stated that PNG will not be signing the Pacific Agreement on Closer Economic Relations, an umbrella agreement between members of the Pacific Islands Forum, which provides a framework for the development of trade cooperation

• Speaking at an audit workshop in Port Moresby, European Union (EU) Ambassador Ioannis Giogkarakis Argyropoulos said the implementation of a road map for the Public Finance Management Act is on track with the EU allocating K3.7m for the plan. He added that the EU support included workshop and the support to the audit committees, and that the bill is expected to be passed before the end of the year

• Nambawan Super (NSL) has signed a 2 year agreement with Air Niugini enabling its current contributing members a discount of up to 15%, and members of the retirement savings account with 45%, to purchase air fares. NSL’s chief manager for member services Charlie Gilichibi thanked Air Niugini and its board and management for the generous discount offer acknowledging the real difference it can make in the members retirement

• OK Tedi Mining has brought more than US$200.0m (K623.0m) since its resumption in March, MD and CEO Peter Graham said. The mine has made 12 shipments since then and the revenue generated from these are denominated in US dollars which served as a valuable source of liquidity to the PNG foreign currency market

• Interoil announced that its assets decreased by US$41.3m or 3.0% to US$1, 150.1m (K3,583.5m) compared to US$1,191.4m (K3,712.16m) from December 31 2015. This decrease was due to the receipt of funds from Total in relation to a transition service agreement plus an adjustment to the discounted value of sale proceeds receivable from Total. In addition, the decrease in cash and cash equivalents and restricted cash, mainly attributable to the drilling of Antelope-6, site preparation and pre-spud works for Antelope-7 development survey costs and other operational costs relating to the Papua LNG project during the six months

• This week’s BPNG auctions in Central Banks Bills were offered only for 28 days with an under subscription of K344.8m out of a total of K356.9m on offer. The weighted average yield was 1.04%

• Auctions in Treasury Bills were oversubscribed by K169.0m out of K150.0m on offer. Weighted average yields were 4.72% for 182 days and 7.69% for 364 days

• The KSi and KSHi closed 0.2% and 1.8% higher at 4,710.9 and 10,041.3 points respectively for the week on the back of a 2.2% gain in BSP (to K8.50) and a 0.3% gain in OSH share price (to K17.20)

International Market Summary

• US stocks climbed to record levels Thursday as better-than-expected economic data and a rebound in oil prices boosted sentiment. The S&P 500 rose 0.5% to a record closing high of 2,185.8. Retailers led gains after posting better-than estimated profits, while energy companies rallied with crude. Shares of oil companies rose after mostly trading in the red earlier in the day when oil prices had dropped more than 1.0%

• European stocks ended firmly higher on Thursday as oil prices shook off losses and investors cheered a round of upbeat earnings reports

• Asian markets were on track to finish a solid week on a positive note as investors took heart from all three major US equity gauges concurrently closing at record highs. That helped investors shrug off data from China that showed industrial production and retail sales growth slowed more than expected in July

• Australian shares struggled higher to a weekly gain as investors digested the first big week of reporting season dominated by full-year results from blue chips. Energy and mining stocks did their mightiest to buoy the index after a lift in crude
oil prices helped send Wall Street to fresh record highs, however negativity surrounding the financial sector and the nation’s biggest telco weighed heavily. The ASX 200 closed 0.4% higher at 5530.9, up 0.6% for the week

• Losses for oil prices had accelerated after the International Energy Agency said oil demand world-wide will be lower than previously expected and warned that a “massive” stock overhang is keeping a lid on crude oil prices. Oil prices, however,
reversed to trade sharply higher as comments from Saudi Arabia’s energy minister raised the possibility that major producers will take action to stabilize the market at a meeting planned for next month

pdfKFM Weekly Investment Update: Friday, 12 August 2016

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