KFM Weekly Investment Update: Friday, 02 June 2017

Local Market Summary:
•The headline CPI rose 5.7%, over 12 months from March 2016 to March 2017.
For the quarter, the most significant increases in CPI by commodity groups
remain were the Alcohol, Tobacco & Betelnut group. The group was up 2.8%
largely driven by increased prices for Betelnut during the quarter. The housing
group witnessed the second largest rise with an increase of 1.3% attributable
to the rise in cooking fuels such as firewood and kerosene and a slight
increase in rental rates (refer exhibit)
•Money laundering and cross-border financing of terrorism should be a matter
of priority for countries in the Pacific region as highlighted by Sir Rabbie
Namaliu in the opening speech of the Pacific Islands Regional Initiative
meeting in Kokopo, East New Britain. Sir Rabbie said the meeting would
establish that digital finance, being the theme of the meeting, played a
significant role boosting development of people to become more involved in
the development of their countries
•Oil Search (OSH) arranged to acquire a 30.0% stake in ExxonMobil Petroleum
Prospecting Licenses (PPL) in the Gulf basin. The acquisition included
PPL474, PPL475, PPL476, PPL477 and PRL39. OSH MD Peter Botten stated
that the Gulf licenses were almost the same as the world class Elk Antelope at
PRL15. He reiterated that the acquisition of the licenses has undergone
prudent screening and approvals of binding agreements, conditions and
regulations as the agreement terms were confidential
•Trustee shareholder organisation for beneficiary landowners and provincial
governments Mineral Resources Development Company (MRDC) joined the
PNG Extractive Industry Transparency Initiative (PNGEITI) multi-stakeholders
group. PNG EITI’s head of secretary Mr Lucas Alkan congratulated MRDC
and said that given the importance and value of the assets MRDC holds for the
people of PNG taking this approach was vital
•BSP entered into a joint venture, buying 50.0% of an asset finance business in
Cambodia and will be rebranded BSP Finance Cambodia Propriety Limited.
BSP chairman Sir Kostas Constantinou said the move to Asia is part of the
bank’s strategy as it looks to further grow its business. It comes after the bank
completed the acquisition of Westpac Bank’s assets in Solomon Islands,
Vanuatu, Tonga, the Cook Islands and Samoa, which cost $US93.0m
•BPNG governor Loi Bakani revealed that the excess in Foreign Exchange (FX)
dropped to K7.0m from K1.9b this month with K280.0m from BSP customers.
BSP CEO Robin Fleming also commented that BSP customers accounted for
40.0% of FX market share. He also said that measures implemented by BPNG
did not affect the bank’s revenues and explained that the measures were
initiated for administrative purposes
•This week’s BPNG auctions in Central Bank Bills were offered for 28 & 63 days
with an over-subscription of K12.0m of the total amount of K714.0m offered
indicating an increase in appetite for shorter dated securities. The weighted
average yields were 1.23% and 2.34% respectively
•This week’s BPNG auctions in Treasury Bills were under-subscribed by
K91.3m out of a total amount of K236.5m on offer signifying a decline in
appetite for longer dated securities. Weighted average yields for terms 182 &
273 days remained unchanged at 4.73% and 6.64% respectively from the
previous week while 364 days slightly increased to 7.89% from 7.88%
•The KSi Index decreased by 4.3% to end the week at 4,880.02 points.
Likewise the KSi Home Index dropped 0.2% to conclude at 11,067.82 points,
reflecting the decline in share prices of BSP, CCP and KAML
International Market Summary:
•US markets ended stronger at Thursday’s close supported by stronger-than-expected
data on private sector employment, with results higher than
expected, lifting investor sentiment ahead US government’s release of more
jobs report on Friday. The S&P 500 and NASDAQ both ended 0.6% higher at
2,430.06 points and 6,246.83 points, respectively while the Dow Jones ended
0.3% higher at 21,144.18 points
•Asian stocks rose on Friday as investor optimism was lifted following the
release of positive jobs data out of the US showing signs of continued
improvement in the job market. Japan’s Nikkei was up 2.5% to end at
20,177.28 points, Hang Seng was higher by 1.0% ending at 25,885.92 points
•Oil prices dropped below $50 on Friday amid worries that US President Donald
Trump’s decision to abandon a global climate pact could spark more crude
drilling in the US, stoking a persistent glut in global supply
•PGK/USD was unchanged for the third consecutive week closing at 0.3145;
PGK/AUD rose to 0.4256 up 0.6% from the previous week. Meanwhile
AUD/USD dropped 0.6% to finish at 0.7391
Click the link below to view the full report in PDF.
KFM Weekly Investment Update: Friday, 02nd June 2017