KFM Weekly Investment Update: Friday, 03 February 2017 - Kina Bank

KFM Weekly Investment Update: Friday, 03 February 2017

Local Market Summary
• Prime Minister Peter O’Neil revealed that the National Government is finalising the release of the second tranche of Credit Suisse Facility. He said the arrangement includes K300.0m that will assist in sorting out Foreign Exchange issues. He added that the current market condition was not conducive for the Sovereign Bond and therefore will wait until the market improves
• PM O’Neill formally invited the President of the United States, H.E. Donald Trump, to visit PNG for the 26th APEC Leaders’ Summit. In correspondence with President Trump, PM O’Neill, highlighted the unique nature of the APEC process and its relevance to economic advancement for all Member Economies
• The Department of Transport and Infrastructure is offering shipping routes to companies to make travel safer in the 13 Maritime Provinces. Secretary Roy Mumu said the initiative is for the private sector to partner with vessel owners to provide the service. The four routes are Port Moresby-Keapara-Mailu, Port Moresby-Gulf-Western province and Huon Gulf in Lae-Northern-Manus. He appealed to the private sector who owned boats to apply for those routes to support the people along the maritime routes
• Oil and gas companies Oil Search and ExxonMobil surrendered one of their petroleum prospective licenses, in PNG. PNG Industry news reported that the pair paid US$15.0m for the remote licence in 2012 and offered further payments and royalties based on success. However, the difficulties associated with exploration in the Highlands, the recent dry wells at Strickland and other factors reduced the attractiveness of the block known as PPL 277
• Customers with BSP will be able to deposit cash conveniently with the planned roll out of red colored Deposit Automated Teller Machine. BSP manager cards and third party products Alu Kala said the Deposit ATM was for SME customers. There is a special deposit card used on the machine where it accepts all the bundles which directly deposits into their account that is linked to the card
• INTEROIL urged its shareholders to vote for the proposed transaction with ExxonMobil. The company in a market release urged the shareholders to follow the recommendations by the independent proxy advisory firms – Institutional Shareholder Services Inc and Glass Lewis and Co (Glass Lewis) – and vote for the proposed transaction during the special meeting on Feb 14
• The Pacific Island nations have some of the most expensive electricity prices in the world, according to International Finance Corporation of the World Bank Group. But there is a new partnership between IFC and Smart Commercial Solar (SCS) where Pacific businesses struggling with high energy costs can get help to evaluate more competitive options. The first phase of the project will begin with a free energy report offered by SCS to businesses interested in calculating how much they can save if they switched to solar. The report is targeted at commercial and industrial customers who pay commercial rates for electricity
• According to PNG Business Council President David Toua; 2017 will see an increase in unemployment as businesses around the country continue to down size their operations. Reasons include lower than expected commodity prices, foreign currency shortages and uncertainty resulting from the proposed changes to the Mining and Mineral Resources Authority Act, amendments to the land Act and proposed SME policy
• This week’s BPNG auctions in Central Bank Bills were offered for 28 days and 63 days with an under-subscription of K56.0m out of a total of K761.0m on offer. The weighted average yield was 1.14% and 2.34% respectively
• This week’s BPNG auctions in Treasury Bills were over-subscribed by K41.2m out of the K189.2m on offer. Weighted average yields were 2.54% for 91 days, 4.72% for 182 days and 7.79% for 364 days
• The Kina Securities Index remained unchanged to close at 4,814.66 points, while the Kina Securities Home Index was down by 0.1% to close at 10,681.74 points underpinned by a decrease in share price of banking and financial stock Bank South Pacific down 0.6% to end at K9.00
International Market Summary
• US stocks closed lower after bouncing around Thursday as concerns about President Trump’s approach on foreign affairs amid spats with key allies and trade partners cast a pall over the market. The DJIA, -0.03% fell 6.03 points to close at 19,884.91 while the Nasdaq Composite, -0.11% lost 6.45 points, or 0.10%, to end at 5,636.20. The S&P 500 bucked the trend to edge up 1.30 points to finish at 2,280.85
• Asian stocks dipped on Friday as Chinese markets fell after Beijing unexpectedly hiked short-term rates, adding to lingering anxiety over global growth in the wake of US President’s aggressive policies on trade and international relations
• The pan-European STOXX 600 index fell 0.30%, while Britain’s FTSE outperformed with a gain of 0.50% after the Bank of England appeared to be in no rush to tighten monetary policy in its latest inflation report
• The ASX failed to follow markets around the region higher after the US Federal Reserve kept interest rates on hold at the end of its two-day meeting on Thursday morning. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each slid 0.10% to 5,645.00 and 5,696.00 points respectively
• Oil headed for a third weekly gain aided by US planning new sanctions on Iran after a missile test. In addition, OPEC member reached out for an output cut of 60.0%, with the Middle East producers implemented cuts and Russia is ahead of schedule with its own reduction, while wary investors are also considering signs that US drillers are taking advantage of higher prices to stage a comeback
• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD depreciated by 1.60% to end at 0.4118, while AUD/USD appreciated by 1.60% to end the week at 0.7651
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KFM Weekly Investment Update: Friday, 03 February 2017