KFM Weekly Investment Update: Friday, 18 October 2013

Local Market Summary

• The Kina Securities Index (KSI) fell this week by 0.7% to 3,919 and KSI Home Index was up 1.3% to 8,284, due mainly to the uplift of New Britain Palm Oil (NBO) price.

• This week Treasurer Don Polye was officially ratified as Chairman for World Bank and International Monetary Fund on Sunday in Washington DC. The Chairman’s role is to preside over annual meetings. Prime Minister O’Neill congratulated Polye saying “His elevation to chair the important financial institutions in the world was a vote of confidence in PNG and would raise its profile in the world scene”.

• Kina Asset Management Limited (KAML) posted a K7 million profit for the 9 months ending 30 September 2013. The income was attributable to valuation gains in listed equities, dividend received and favourable foreign exchange strategies employed by KAML. NTA as at 30 September is K1.04.

• On Wednesday, Credit Corporation Limited (CCP) shareholders voted to reject the Offer by Bank South Pacific (BSP) to purchase CCP finance subsidiary for K250 million.

• PNG Promotion Authority has launched its online registry system on Thursday Where people can register their business online. This service will come into effect on the 25th November this year.

• During the week, Port Moresby and Lae hosted a Taiwan trade fair. Business deals amounting to US15 million were generated during the fair which signified strong business relationship amongst both countries.

• Melanesian Trustee Services Limited (MTSL), trustee for the Pacific Balance Fund (PBF) announced they are now verifying the status of its unit holders.

• Marengo Mining Limited (MMC) announced that it has entered into a Memorandum of Understanding (“MoU”) with the Madang Development Corporation to Cooperate in, and explore becoming an off take party, in relation to a power supply solution for industrial, and domestic electricity consumers in Madang Province.

• Newcrest Mining Limited (NCM) surged over the week as analysts upgraded recommendation on to “outperform” after the company announced that cost cutting was improving its ability to withstand any fall in the gold price even after absorbing an extra tax charge. NCM share price rallied by over 5% on Friday following the announcement to replace the outgoing CEO by the end of the year after the asset write down (Refer to graph in the PDF attachment below).

• PNG Government Inscribed Stock Auctions were held during the week. 10 year GIS were at a high for the year with 8.86% due to large issuance.

International Market Summary

• U.S. markets moved higher on Thursday posting an all -time record high as investors felt relief that lawmakers have avoided a default on the country’s debt combined with prospects that the Federal Reserve is unlikely to curtail its stimulus program after a weaker-than-expected national jobs report.

• China’s economic growth accelerated for the first me in three quarters, as Premier Li spurred factory output and investment to meet the government’s expansion goal for 2013. Gross Domestic Product rose 7.8% in the July-September period from a year earlier. Industrial production advanced in September by 10.2%, in line with projections, while retail sales gained 13.3 %.

• Blood products and vaccines maker CSL is embarking on a share buyback worth almost $1 billion as it flags a slowdown in profit growth. “Buybacks remain an effective way to manage our capital that delivers improved investment returns for shareholders,” CSL chairman Professor John Shine stated.

• ASX closed the week on a high. The ASX200 jumped 1.7% to 5321.5.

• In currency, The Kina depreciated against the USD and AUD for the week closing USD0.3811 and AUD0.3955 respectively.

• In commodities, Gold closed the week at USD1,317.2 for the week. This saw a 3.9% gain for the day.

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