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KFM Weekly Investment Update: Friday, 12 June 2015

Local Market Summary:

•PNG Customs collected K2.6b last year as was revealed at the Customs business consultation
_on workshop. It was also noted that the Government set a target for PNG Customs to
collect K2.9b. It resulted due to the drop in GST imports

•National Petroleum Company (NPCP) is prepared to take on its new commercial identity
– Kumul Petroleum Holdings, MD Mr Wapu Sonk says following the passing of the Kumul
Petroleum Bill last week in Parliament. He said it was a reaffirmation of the role that
NPCP was already performing

•Kina Group got a great deal of international publicity relating to its plans of acquiring
Maybank by listing on the Australian Stock Exchange (ASX) with Morgans acting for it
according to CEO Mr Syd Yates. As result of this transaction Kina will have a full banking
licence making it PNG’s fourth-largest bank. Mr Yates believes that investors will
find Kina a good way to gain exposure to PNG, and opening its market to international
investments

•Steamship Group of Companies recorded a 22.2% reduction in profit a2er tax and minority
interests of K88.7m for 12 months to last December compared to K114.0m. Chairman
Mr Cundle said that trading conditions slowed last year as the construction phase
of the LNG PNG Project came to an end. He said the mid-year intervention by BPNG
added disruption to foreign currency transactions and created additional cost burden

•Marengo Mining Corporation (MMC) has delisted from the ASX as of 02/06/15

•Bank of South Pacific’s (BSP) spokesperson stated that there is an overwhelming interest
for the first home ownership scheme (FHOS) from the citizens. This week, Governor-
General Sir Michael Ogio officially signed the documents on the FHOS product with BSP.
Providing an update on the product, BSP’s CEO Mr Robin Fleming said the bank had
funded 25 loans at the value of K8.4m.

•Oil Search (OSH) may sell part of its stake in the P’nyang gas field to Santos and discussions
have occurred between the PRL 3 joint venture officials. The PRL 3 joint venture
partners includes OSH 38.5%, ExxonMobil 49.0% and JX Nippon 12.5%. Santos already
holds a 13.5% stake in the PNG LNG Project. Santos’ vice president Mr John Anderson
reported that the company was working on a potential deal that would give it a stake in
the P’nyang gas field, the main field designated to feed what is expected to be a lucrative
expansion of the $US19.0bn PNG LNG venture

•This week’s BPNG Treasury Bill auction was undersubscribed by K93.9m out of the
K200.0m on offer across both 182 and 364 terms. Weighted average yields were 4.5%
for 182 days and 7.2% for 364 days from the week’s auctions

•The KSi index ended the week flat at 3,554.96 from the previous week while the KSi
Home Index ended the week higher 0.4% to 9,791.71

International Market Summary:

•Global equity markets rose on Thursday on optimism over still testy Greek debt talks and
on strong U.S. retail sales, which li2ed the U.S. dollar and bolstered expectations the
Federal Reserve will raise interest rates this year. US stocks gained a2er data showed
retail sales rose in May, boosting optimism about the economic outlook This reflected in
the performance of the NASDAQ, S&P500 and DJIA which were all up for the week 0.3%,
0.8% and 1.1% respectively

•Stocks in Asia rebounded, with a weaker yen li2ing Japan and a rate cut in South Korea
helping shares there break a four-day losing streak . The Nikkei and Hang Seng both
closed the week lower at 0.3% and 0.7%

•European stocks pared gains a2er the International Monetary Fund said it had stopped
bailout talks with Greece . The DAX closed the week up 1.2% 11,332.78 points while the
London FTSE closed up 0.6% at 6,846.74 points

•The Australian share market weathered its heaviest week of losses in three years as the
sell-off on the big four banks continued to drag, and investors braced for a long weekend
set with big news from abroad. The benchmark S&P/ASX 200 finished higher by 0.8% to
5,539.70 for the week

•US Treasuries yields neared session lows a0er the IMF comments raised doubts that
Greece was close to a deal to avert default, spurring safe-haven demand for U.S. government
debt. The yield on benchmark 10-year Treasuries was at 2.4%. (refer to graph)

•Oil prices declined further due to the stronger dollar and a gloomy economic forecast by
the World Bank, while a bullish International Energy Agency report on global demand
failed to dispel concerns over a supply glut

•Copper prices fell in tandem with other base metals as the stronger dollar outweighed
improving Chinese economic data while gold prices closed the week up 1.2% at
US$1,181.80

•Both PGK/USD and PGK/AUD each ended the week lower, each closing at 0.3% to 0.3665
and 0.7% to 0.4739

Click on the link below to view full report in PDF.

pdfKFM Weekly Investment Update: Friday, 12 June 2015

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