KFM Weekly Investment Update: Friday, 18 July 2014

Local Market Summary

• BPNG announced that the level of employment in the private sector declined by 0.2% in the March quarter compared to an increase of 1.5% last December. BPNG also announced a slow-down in domestic economic growth in the first quarter of 2014 attributable to the near completion of the construction phase of the PNG LNG Project.

• The Employers’ Federation has directed employers to comply with the new minimum wage, as publicised last week. Effective July 3 2014, the minimum wage is now K3.20.

• Digicel plans to launch a multi-station television service later this year. This is in line with its strategy to transform the company into a broader based media company in PNG.

• BSP announced a K15.0m buyback program which allows registered shareholders to sell a maximum of 1,000 shares. The buyback commenced on 15/07/14 at a price of K7.25 and will continue for 12 months.

• Marengo Mining’s issuance of US$10.0m (K23.8m) of convertible unsecured debentures to its major shareholder – Sentient – has been completed. The deal will increase the firm’s stake in the PNG explorer from 22.0% to 80.0%.

• Kina Asset Management Limited announced an NTA of K1.08 for the month of June. This is consistent with the announcement dated 17 June stating a 12.0% fall of the June NTA following the introduction of BPNG’s trading bands.

• This week’s BPNG auction in T’Bills was under-subscribed by K37.0m. The 182 days weighted average yield rate slightly increased to 4.3% while the 364 days weighted average yield rate remained unchanged at 6.5%.

• Further, its auction of GIS’s was over-subscribed by 160.0m with the rates for 2020/2024/2027 series falling. (The new curve rates are; 7.9%, 11.9%, 12.9%, 13.9% and 15.4%).

• For the week, PGK/AUD closed slightly higher to 0.1% settling at 0.4376 while PGK/USD exchange closed 0.1% lower, settling at 0.4099.

• The KSi Index ended the week flat at 3,765.8 while the KSi Home Index closed 2.3% low to 8,353.7.

International Market Summary

• US Fed officials have agreed to end their asset-purchase program by October 2014 if the economy holds up. Fed is poised to continue supporting favourable financial conditions needed to sustain growth – maintaining the benchmark interest rate at a record zero to 0.25% since December 2008.

• The yen touched the strongest level since February against the euro as investors sought haven assets after a Malaysia Airlines plane was shot down over Ukraine and amid escalating tension in the Gaza Strip.

• The S&P 500 Index declined 1.2% on 17/07/14, the biggest one-day slide since 10/04/14. Us markets fell after an unexpected fall in housing starts and following European market after sanctions were imposed against Russia (see chart).

• Horizon Oil confirmed plans for the proposed A$800m merger with Roc Oil will proceed despite an attempt by shareholders to stop the scheme.

• Gold was down 1.8% to U$1,315.8 while both Brent and Light Crude increased by 1.7% and 2.9%, respectively.

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

pdfKFM Weekly Investment Update: Friday, 18 July 2014

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