KFM Weekly Investment Update: Friday, 01 February 2019 - Kina Bank

KFM Weekly Investment Update: Friday, 01 February 2019

  • Prime Minister (PM) Hon. Peter O’Neill said the Wapenamanda District in Enga
    province would be the first district in the country to have the electrification
    initiative rolled out.PM O’Neill was responding to series of questions raised by
    the Member for Maprik John Simon at the Parliament, regarding multi-lateral
    APEC agreement signed in November 2018 for declared nations to work
    together to bring electricity to 70.0% of PNG by the year 2030. Hon. PM O’Neill
    also confirmed that funding was already made available by the New Zealand
    government for this first step in the road to nationwide electricity provision and
    that the other nations Australia, USA and Japan were now all in close
    consultation with respective state agencies to begin work on the agreement.
  • Meanwhile, Department of Petroleum & Energy and PNG Power Limited will be
    the entities to lead these projects and are expected to begin work in a few
    weeks.
  •  Public Enterprises and State Investments Minister Hon. William Duma,
    commended the National Development Bank (NDB) and its subsidiaries on their
    significant achievements since 2017 during parliament session on Tuesday.
    Part of the success were lending to women entrepreneurs under the NDB
    women-in-business portfolio which grew to K9.3m and an increased customer
    base with Peoples Micro Bank. Minister Duma further stated the NDB was a
    key implementing agency for the 2016-2030 National SME Policy that the
    government will utilize to develop the indigenous sector from 10% to 70% by
    2050.
  • Horizon Oil Ltd announced its gross revenue of US$139.10m (K468m) with its
    December 2018 quarterly report, an increase of 88% compared to the prior
    year. Chief Executive Officer Mr. Michael Sheridan, said the solid cash flow
    enabled the accelerated reduction of the company’s debt which well positioned
    the company to continue in 2019 with strong performance from its conventional
    oil fields in China and New Zealand while continue progressing with its joint
    venture partners in their independent development plans for their PNG assets.
  • OK Tedi Mining (OTML) Limited announced shareholders will be paid their 2018
    final dividend of K200m in February 2019. This is in addition to the 2018 interim
    dividend of K100m that was paid in July 2018. According to Managing Director
    and CEO Mr. Peter Graham, 2018 was a demanding year following the
    February earthquake which directly affected production and extended dry
    weather in November and December which prevented shipment of materials.
    After payment of the final dividend OTML will maintain sufficient cash reserves
    to fund exploration and resource development investments, meet normal
    supporting capital requirements, and complete the balance of the K700 m in-pit
    crusher replacement project whilst remaining debt free.
  • Bank of Papua New Guinea (BPNG) Governor Loi Bakani in reference to the
    foreign currency market reaching normalization, announced that BPNG will
    loosen its restrictions on capital outflows for dividend payments. During the
    forex shortfall period, BPNG had instructed banks to focus on trade first, thus
    capital outflows were difficult for major firms operating in PNG who have had to
    retain their dividends and investment opportunities overseas. Mr. Bakani said,
    since the situation occurred corporations were declaring their profits in Kina but
    not paying them. Now that capital outflows have been prioritized, some dividend
    payments can be remitted which in a way maintains shareholders confidence
    in the businesses here in PNG.
  • This week’s BPNG auction in Central Bank Bills were over-subscribed by
    K2.00m out of the total amount offered K938.50m. This indicated that there was
    an increase in appetite for shorter dated securities. The weighted average yield
    for 28 days remained unchanged at 1.39% from last week, while the 63days at
    2.35%. There were no bids for 91 and 182 days.
  • This week’s BPNG auction in Treasury Bills were over-subscribed by K230.98m
    out of the total amount offered K195.11m. This indicated that there was an
    increase in appetite for longer dated securities. The weighted average yield for
    182 days remained unchanged at 4.68%, while the 273 and 364 days dropped
    by 0.33 points and 0.36 points to 6.31% and 7.16% respectively from last week.
    There were no bids for 63, and 91 days.
  • Kina Securities Index and Kina Securities Home Index both closed higher by
    0.6% and 0.4% to end at 5,175.54 and 11,458.63 points respectively. This was
    mainly attributed to rise in share prices of NCM and BSP to close by 1.0% and
    0.5% to close at K51.00 and K10.31 respectively.

International Market Summary:

  • US stocks rallied to cap their biggest monthly gain in three years as better-than expected
    corporate earnings and the Federal Reserve’s dovish turn lifted
    investor sentiment. Dow Jones, S&P 500 and NASDAQ all closed high by 1.1%,
    1.5% and 1.6% to end at 24,999.67, 2,704.10 and 7,281.74 points respectively.
  • A strong performance by the energy and mining sectors was not enough to save
    the Australian share market from being weighed down by troubled financials at
    the close. Both the S&P 200 and S&P 50 closed low by 0.7% and 0.8% at
    5,862.83 and 5,767.20 points respectively
  • Asian stocks generally closed higher, with a number of indexes rising
    following a Fed-fuelled rally during the week in the US. Nikkei, Hang Seng
    and Shanghai all closed high by 0.1%,1.1% and 0.6% to end at 20,788.39,
    27,881.97 and 2,617.02 respectively
  • Oil prices reversed earlier gains to end lower after President Donald Trump said
    any US-China trade deal may have to be postponed, which sparked concerns
    of a weaker global economy and reduced demand for oil. Light Crude increased
    by 0.1% to US$53.74 while Brent Crude dropped by 1.3% to close at US$60.84.

pdf KFM Weekly Investment Update: Friday, 01 of February 2019