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.

KFM Weekly Investment Update: Friday, 01 of February 2019