KFM Weekly Investment Update: Friday, 25 October 2013

Local Market Summary

• The Kina Securities Index (KSI) fell this week by 0.1% to 3,897 and KSI Home Index fell 1.2% to 8,188.

• In a statement on Tuesday, Treasurer Don Polye said PNG has the adequate foreign reserves to manage the sharp fall of the Kina against other currencies. This comes from the ongoing depreciation of the Kina against other major currencies. The Central Bank in its economic quarterly report pinned the decrease in the kina was due to combined effect of high domestic demand and lower foreign exchange inflows.

• Nambawan Super Limited (NSL) on Monday announced Mr Garry Tunstall as the Fund’s new CEO. Tunstall was the former Managing Director of ANZ (PNG) and has 40 years experience in the banking and finance industry. Mr Michael Block was also announced as the Chief Investment Officer as part of an organisational restructure of the Board.

• Nasfund Contributors Savings and Loans Society (NCSL) announced it had recorded a net profit of K4.8 million up 14% from 2011. NCSL posted a net asset value of K11.7 million for the year ending 2012. Income was mainly derived from interest income, loans, interest from investments in government inscribed stock and dividends from equity and property investments.

• Airlines PNG (APNG) posted a net loss of almost K20m last year after making a profit of K2million in 2011. Despite the loss, APNG Board Chairman Simon Wild mentioned that the APNG Board has conducted reviews to the company’s operations aimed to deliver quality services.

• City Pharmacy Group (CPL) Chairman Mahesh Patel has announced that CPL will keep its current prices and absorb costs amid the weakening Kina. CPL was experiencing a slow own in growth and increase in import costs.

• Independent Public Business Corporation (IPBC) now owns 85% of Bemobile after the completion of the share transfer. As Bemobile is owned by the state, all Papua New Guineans will be given the opportunity to become shareholders of the company in the coming years. Sundar Ramamurthy was appointed as Group CEO.

• Oil Search Limited (OSH) has invested K24.5 billion since 2003 in developing and maintaining PNG’s oil and gas industry, OSH Managing Director Peter Botton said during the Company’s 10th anniversary. OSH has a current market capitalisation of K29 billion and a 29% interest in the PNG LNG.

• The PNG Sustainable Development Program has laid off 59 workers because of financial problems it faces, Chief Executive Officer David Sode said this week. This is due to the lack of revenue flow following the National Government’s expropriation of Ok Tedi mine.

• The feasibility study conducted on the Yanderra project is nearing completion, Marengo Mining (MMC) President Les Emery said on Wednesday. To date the company has spent more than K300 million on the project.

International Market Summary

• Bank of America, America’s second largest Bank is cutting about 4,200 jobs as it responds to changes in the housing market following moves by other banks.

• The biggest European rally in 19 months is leaving nearly no stock behind, pushing up equity prices from Frankfurt to Athens as investors put money into the region at the fastest rate since 2002. The Euro Stoxx 50 index (SX5E) has climbed 21% since reaching its 2013 low on June 24.

• United Kingdom Gross Domestic Product rose to 0.8% from the second quarter, the biggest increase since the second quarter of 2010.

• BHP’s shares were up 1.8% to A$36.85 as third quarter production of iron ore surged 23% year-on-year to 48.8 million tonnes.

• In currency, The Kina depreciated against the USD and AUD for the week closing USD0.3774 and AUD0.3929 respectively.

• In commodities, Gold closed the week at USD1,342 for the week. This saw a 2.2% gain for the week.

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pdfKFM Weekly Investment Update: Friday, 25 October 2013

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