KFM Weekly Investment Update: Friday, 28 March 2014

Local Market Summary

• The Papua New Guinea Government has already concluded the K3 billion (AUD$ 1.239 billion) loan with the UBS bank to purchase a 10.01 per cent stake in Oil Search, with the share transfer taking place on 13 March. This means the Ombudsman Commission’s investigations will only look into what has happened rather than stopping the deal from going through. Senior government officials confirmed on Tuesday that the deal has been completed and the shares were already issued to the Independent State of PNG, which is now the second single largest shareholder in Oil Search.

• Papua New Guinea Prime Minister Peter O’Neill has welcomed ANZ Bank’s assessment of the country’s economy. Two highly respected economists Raymond Yeung and Daniel Wilson last week gave a glowing report of the PNG economy, debunking recent criticisms of the debt levels, deficit and budget financing.

• Inter Oil Corporation and Total SA have closed a revised sales and purchase agreement covering the Elk-Antelope gas field in Petroleum Retention Licence 15 in Papua New Guinea. Under the revised agreement signed today, Total has acquired through the purchase of all shares in a wholly owned Inter Oil subsidiary – a gross 40.1% interest in PRL 15. Inter Oil retains 35.5% of the licence and immediately receives US$401 million for closing the transaction, and will receive US$73 million on a final investment decision for an Elk-Antelope LNG project, and US$65 million on the first LNG cargo.

• According to company release, Highlands Pacific (HIG) will increase its interest in Ramu nickel from 8.56% to 11.3% at no cost after repayment of its share of the project cost.

• Nambawan Super Limited’s profit grew by 17% to K410.60 million from it’s 2012 audited results. Its board had approved a crediting rate of 11.25% from 11% in 2012, equating to more than K419.5 million payable to members accounts for last year.

• THE Wafi gold mine, which is opening soon, has been listed among the top 10 mines in the world, an officer of the company revealed on Wednesday. John Maran, Morobe Mining Joint Venture’s (MMJV) community engagement coordinator, said the pre-feasibility study results show that Wafi’s gold is among the highlygraded gold in the world.

• Australia and PNG have agreed on a new economic cooperation treaty to allow for an increase in trade and investment. This will see Australia investing close to A$20 billion and trade between the two countries reaching A$8billion.

• PNG Kina slipped 1.2% for the week as Australian dollar strengthen at the back of the Statement from RBA Governor Steven alluding to signs of hand-over from mining led growth to domestic consumption. The Governor reiterated that the Australian economy may strengthen late in the year. (Refer to graph in the PDF attachment below)

• The KSi Index closed the week flat on 3,616.74 while the KSi Home Index closed the week lower 0.2% at 7,960.80.

International Market Summary

• Australian Banks ( particularly NAB) are looking to close majority of their business arms in the UK after labelling them “unstable” due to bad debt arising in commercial properties.

• European shares were mixed on Thursday in response to corporate news. The FTSEurofirst 300 index rose by 0.2% with the UK FTSE down 0.3%, while the German Dax gained 2.6 points or less than 0.1% .

• US long-term treasury prices rose on Thursday (yields lower) after an auction of $29 billion in seven-year notes was met with strong demand. US 2 year yields were flat at 0.45% while US 10 year yields fell by 2 points to 2.68%.

• World oil prices rose on Thursday as investors responded to generally firmer US economic data. Brent crude rose 0.7% to US$107.83 a barrel while US Nynex crude rose 1.0% to US$101.28.

• China’s major onshore oil firms Sinopec and Petrochina said profits rose in 2013, despite weekness in the world’s second largest economy. Profit’s edge up 3.5% with revenue up to 3.4% due to stable and domestic demand.

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

pdfKFM Weekly Investment Update: Friday, 28 March 2014

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