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KFM Weekly Investment Update: Friday, 18 November 2016

Local Market Summary

• Prime Minister Peter O’Neill along with his 20 counterpart APEC leaders are set to enter into discussions on how the region will manage the impact of slowing global trade. Other issues that will also be on the agenda include enhancing skills development in a digital age, food security, climate change and expanding access to free trade and investment

• The International Monetary Fund reported that commodity prices will remain low for a longer period. The IMF’s commodity price index fell to 3.0% in September quarter thus reflecting a drop in energy and non-energy prices. Similarly, Bloomberg Commodity Index declined by 4.0%, which was caused by weak agricultural products

• Air Niugini announced that it will begin flights to the Federated States of Micronesia (F-S-M) in December. It said it will operate two return flight services every Wednesdays and Saturdays in a week, from Port Moresby to Chuuk and Pohnpei. It further stated that connections will be available through Cairns, Brisbane, Sydney, Manila, Singapore, Nadi and Honiara to the F-S-M

• The Brian Bell Group opened its new Lae HomeCentre this week, 2 years after the original outlet was gutted by fire. The new HomeCentre marks the rebranding and expansion plans of the business. Executive Director Ian Clough said that the group would continue to grow through the identification of opportunities with focus on larger potentials over the near-term

• St Barbara, after conclusion of its strategic review announced to the Australian Stock Exchange (ASX) that it will continue to operate the Simberi Gold Mine in New Ireland Province. It stated that prospective buyers expressed interest in PNG assets but did not meet its valuation requirements. Managing Director Bob Vassie added that they have tested each strategic option for the future of PNG assets and are now confident about the preferred strategic direction

• Santos signed an agreement to farm-in 20.0% interest in petroleum prospecting licence (PPL) 402 from Oil Search and ExxonMobil. The licence covers an area of 510 km2, and is located about 40km northwest of the Hides gas field and productions facilities in Hela

• The Hides Gas Development Company endeavours to move into main stream business as opposed to operating primarily as a landowner company around the PNG LNG project area. Chairman Tuguyawini Pirindali confirmed that this would be made possible through its partnership with Nana Development Corporation, an American landowner company which focuses on serving the federal, oil, gas and commercial business sectors.

• Kina Securities Limited (KSL) has made appointments of Gregory Brent as Head of Credit and Chris Davies as Senior Relationship Manager with Kina Bank’s Lae branch. Kina’s CEO Syd Yates said he was delighted to have them join the group as their breadth of experiences will be valuable to Kina in areas of credit risk and business banking which are the focuses for Kina to expand its Banking business in the future

• InterOil Chairman Chris Finlayson said he will challenge the Yukon court decision to stop the $US2.5b (K7.9b) transaction to be effective. On the other hand, former chairman of OIC, Phil Mulacek said that he is open for discussion. ExxonMobil has declined to comment on the ruling and OIC said that the company still believe that the Arrangement Agreement represents the value of its shareholders

• According to PNG Industry News, Gold Crater Mining Limited made an announcement of high-grade gold veins found at its HGZ project in PNG. The Inferred 44,500 tonnes grading at 11.9 grams per tonne for 17,100 ounces is located in three major gold veins at the project. Craters Technical Director Richard Johnson said that the discovery has culminated the potential for profitable gold mining in that area

• This week’s auctions in Central Bank Bills were oversubscribed by K25.0m out of K325.0m offered. The weighted average yield for 28 days remained unchanged at 1.17%

• This week’s BPNG auctions in Treasury Bills were undersubscribed by K12.6m out of the K198.4m on offer .The weighted average yield for 182 days was 4.72% while 364 days was at 7.73%

• The KSi closed 0.4% higher for the week at 4,796.34 points on the back of a 1.2% gain in Oil Search at K17.30. The KSHi remained unchanged at 10,675.08 points

International Market Summary

• In the US, markets continued to rally closing off near record highs led by the Financials sector as the market continued to price-in the likelihood of a year-end rate hike. Fed Chair Janet Yellen adding to the expectation of an increase in rates with comments that the economy could withstand an interest-rate rise soon

• The Australian share market closed the day off higher on the back of improvements out of the Consumer Discretionary and Telecommunications sectors. However, for the week, the ASX 200 was slightly lower as investors took profits from the rally post Trump election

• The European Markets were stronger this week though still lower for the month

• Asian shares were higher, as investors added to their bets that U.S. President elect Donald Trump’s policies would be good for global banks. The Nikkei ended the week higher at 17,967.4 points, up 3.4%

• PGK/USD depreciated down 0.2% for the week to end at .3150, while PGK/AUD appreciated by 3.0%% to end the week at 0.4139

Click the link below to view the full daily market report in PDF.

pdfKFM Weekly Investment Update: Friday, 18 November 2016

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