KFM Weekly Investment Update: Friday, 16 May 2014

Local Market Summary

• Prime Minister Peter O’Neill has announced that the Government will set up a commission of inquiry to investigate the recent sale of PNG Sustainable Development Program Ltd assets. He further stated that PNGSDP Board led by Chairman Sir Mekere Morauta had no authority to dispose the company’s assets.

• Treasurer Patrick Pruaitch stated in the Parliament that the Liquefied Natural Gas (LNG) exports would start this week and the first LNG was sent for markets in China, Japan and Taiwan. Project Operator Exxon Mobil PNG Ltd MD Peter Graham also stated the company was ready to load the first vessel after conducting sea trials earlier, a total of six(6) LNG tankers would be involved in this project in the long run.

• Westpac has signed a five year deal worth about A$100 million (K259 million) with Telstra (Australia’s largest telecommunication and media company) to provide domestic data network, primary internet access and outbound voice at Westpac branches in PNG and other Pacific Islands nations. The five year contract will include network connectivity, digital media solution and data centre connectivity. Westpac have heavily invested in its telecommunication infrastructure in PNG with brand new data centre in the new head office in Port Moresby.

• InterOil Corporation Limited released its Q1 2014 results announcing US$318.6 million net profit stemming from the one-off sale of its PRL 15 license to Total SA. CFO Don Spencer announced that despite slower retail and wholesale demand in PNIOC’s refineries were enjoying higher margins driving a small but positive net profit.

• Newcrest Mining CEO Greg Robinson reported in the Wall Street Journal to have cut 208 jobs in Q1 2014 on NCM’s Lihir project in order to alleviate the cost pressures that saw the shares slump recently. Operational cash flows jumping immediately, up 30% (compared to previously corresponding period) buoying the share price in early 2014.

• Oil Search held its Annual General Meeting today where the Board and Management outline the triumphs in the PNG LNG Project of which OSH holds a 29% interest. First shipments to Japan are already underway and the Board acknowledged the transformation of the Company to a prominent LNG producer following the shipment and the PRL 15 opportunities.

• Mineral Resources Authority MD Philip Samar has told The National that he hopes to hand down the decision on Kula Gold’s mining application to mine gold on Woodlark Island (Mine Bay).

• PNG PM Peter O’Neil announced to have made available K28 million for the feasibility study into converting Simbu Province’s vast limestone resource into cement.

• The bids in the Bank of PNG’s Central Bank Bills and Treasury Bills Auctions were oversubscribed. The weighted average yield (WAY) for 182 and 364 day Treasury Bills were 3.69% and 6.01% respectively.

• The KSi Index closed the week marginally up to 3,658.13. The KSi Home Index closed the week down at 8,084.47.

International Market Summary

• The Euro zone economy grew less than expected at the start of the year while inflation remained locked in the ‘danger zone’ below 1 %, increasing pressure on the European Central Bank to ease monetary policy at its next meeting in June.

• China Central Bank called on the nation’s biggest lenders to fasten granting of the mortgages under the falling housing market and economy. The Bank believes that the cut in home price and the incentives from the property developers are not able to boost the falling economy. China’s Property market slowed down giving rise to empty units and fell in home sales.

• U.S data, this week, have reinforced investors fears of economic slow down in the first quarter. Economic analysis conclude that U.S had a negative growth for the first three months of 2014. However general market consensus pegs U.S economic growth was up 3% in the month of April.

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pdfKFM Weekly Investment Update: Friday, 16 May 2014

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