KFM Weekly Investment Update: Friday, 05 May 2017

Local Market Summary
• A Malaysian company called TZEN Group has signed an agreement called the Kairak nucleus oil palm development project agreement with that Government to develop an oil palm project in East New Britain Province. TZEN Group has existing investments in oil palm in the province and will now invest K300.0m in the project. The agreement was signed between TZEN Group’s CEO Mr Tan Eng Kwee, PNG’s Governor General Hon.Bob Dadae signed the agreement on behalf of the Government and Secretary Mr John Andrias signed on behalf of Trade, Commerce & Industry
• National Fisheries Authority’s MD Mr John Kasu said that PNG is a small country but huge in the Tuna world. Mr Kasu said this during the recent World Tuna Day celebrations. Mr Kasu acknowledged countries in the Nauru agreements which are responsible for the management and harvest of 50.0% of the world’s tuna and added that the tunas produced by PNG has great value and the nation must work together to provoke a stronger awareness of greater global efforts in sustainable management in conservation of the tuna resource
• A meeting and signing ceremony between the Papua New Guinea Extractive Industries Transparency Initiative (PNG EITI) and Japanese International Cooperation Agency (JICA) to partner and do tangible development for the resource sector has recently occurred. Department of Petroleum and Energy Secretary Mr Kepsy Puiye stressed that the Department was in dire need of capacity building and infrastructures to carry out their role as the regulator of the mining and gas sector and that JICA was bringing a lot of experience and value to the development program
• Meanwhile, JICA’s Chief Representative to their PNG Office Mr Takasi Toyama said that their participation in the signing of the official minutes of the meeting for technical cooperation in improving resource revenue management will also help in strengthening economic growth. Mr Toyama stressed that JICA is confident that the program will provide the mechanism to improve revenue management for the extractive sector and are happy to partner with PNG EITI
• Australia and New Zealand have set the time frame for the PACER Plus to be concluded in June. However, PNG has withdrew from the agreement last year referring to concerns over the trade benefits while Fiji is threatening to withdraw on their concerns raised around infant industry protections and most favoured nation clause are not addressed adequately
• PanAust’s released its feasibility study on ore reserves in Frieda River, West Sepik Province. The feasibility study indicated that Ekwa and Koki mineral resources was 1,860 megatonne (Mt) at 0.5% equating to an 8.0% increase in copper metal, ore reserves increased by 13.0% to 686 Mt at 0.5% and 0.3g/t gold, the project’s post-tax net present value increased by 38.0% to US$1,130.0m and the project risk profile reduced through a reduction of inferred mineral resource in the mill feed and independent reviews confirming feasibility of the integrated storage facility. The estimated development capital expenditure remains unchanged according to the feasibility study
• Kina Securities (KSL) announced that Sir Rabbie Namaliu will retire as chairman of the Board and non-executive director following the completion of the Annual General Meeting this month. Sir Rabbie said it had been a privilege to be part of KSL’s ongoing success and development. Sir Rabbie will be replaced by Mr Isikeli Taureka who joined the Kina Board as a non-executive director last year. Mr Taureka was an executive director at InterOil Corporation and held management roles in several companies
• This week’s BPNG auctions in Central Bank Bills were offered for 28 days with an oversubscription of K17.3m out of a total of K419.2m on offer. The weighted average yield remained at 1.22% from the previous week
• This week’s BPNG auctions in Treasury Bills were under-subscribed by K85.2m out of a total of K189.5m on offer. Weighted average yields for 182 days, 273 days and 364 days were 4.73% , 6.59% and 7.85% respectively
• The KSi Index decreased by 0.7% to close at 5,095.85 points and the KSi Home Index also dropped by 0.2% to conclude the week at 11,076.54 points, reflecting the drop in share prices of CCP and HIG
International Market Summary
• The Reserve Bank of Australia has lifted its economic forecasts over the near-term but it has not materially changed its forecast on inflation. Economic growth is now projected at 2.75% to 3.75% in June 2018 with inflation projected between 1.5% to 2.5%
• The Australian stock market was modestly lower, extending losses to a fourth day following cues overnight from Wall Street as well as lower commodity prices. The S&P/ASX 200 closed for the week down by 1.5% at 5,836.60
• The US stocks finished slightly lower following a choppy session in which the energy sector tumbled alongside a drop in crude oil prices. The Dow Jones Industrial Average finished down 0.1% at 20,951.47 points
• European stock markets rose on Thursday as French presidential frontrunner Emmanuel Macron was viewed as the winner of a crunch election debate ahead of Sunday’s run-off vote. Meanwhile the Frankfurt’s DAX climbed by 1.7% to a new record close, ending the first time above 12,600 points at 12,647.78.
• Asian stocks dropped for the third consecutive day this week as recent falls in commodities raised concerns about the health of the global economy
• PGK/USD remained flat for the week to close at 0.3145, PGK/AUD appreciated by 1.3% to end at 0.4264 while AUD/USD depreciated by 1.3% to end the week at 0.7376

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KFM Weekly Investment Update: Friday, 05th May 2017