KFM Weekly Investment Update: Friday, 06 April 2018 - Kina Bank

KFM Weekly Investment Update: Friday, 06 April 2018

Local Market Summary:
● Papua New Guinea’s monetary policy statement released by the Bank of Papua New Guinea in March focuses on the National Budget expenditure of K14,717.9m and revenue of K12,730.7m giving a deficit of K1,987.2m or 2.5% of Gross Domestic Product (GDP). The Government aims to fund the deficit from external sources with the support of agriculture and Small to Medium Enterprises sectors
●  Prime Minister (PM) Peter O’Neill said the decision to remove toea coins from the system remains with the Bank of Papua New Guinea (BPNG). He said BPNG managed country’s monitory policy and are responsible for managing the money system in the country so to make transactions we will still need the coin although their value has been depreciated, he said. PM said PNG currency had gone down low compared to the US dollar and Australian dollar
● The Asian Development Bank (ADB) together with the PNG Government have signed a US$1.0m grant agreement purposely for relief and recovery activities in the earthquake affected provinces. ADB country Director Mr David Hill confirmed that the grant will come from ADB’s Asia Pacific Disaster Response Fund designed to provide ADB developing member countries impacted by natural disasters
●  According to Public Enterprise and State Investment Minister Hon. Mr William Duma, the National Development Bank’s (NDB) net assets have grown by K200.0m over five years since the Government directed NDB to reduce all lending rates to 6.5% per year effective January 1, 2013.
●  The National Fisheries Authority’s (NFA) Managing Director Mr John Kasu, Fisheries contribution to the national economy in 2016 was approximately K915.0m in combined investments; K210.0m in combined exports and the GDP contribution about K113.0m. He further added that NFA’s strategies and future outlook will assist with the development of PNG’s Medium Term Development Plan III as was the purpose of the national planning consultative summit
● Kina Securities has announced that the Annual General Meeting (AGM) will be on 23 May. Shareholders will be advised of further details regarding the AGM in late April
● Oil Search (OSH) advised that the Central Processing Facility (CPF) which was shut down in the recent earthquake in the Highlands Region has resumed operations. Oil production has commenced from a number of Kutubu oil field wells at an initial rate of approximately 4,000 barrels of oil per day. This follows a detailed assessment of all OSH-operated infrastructure, including the processing equipment, storage tanks and flow lines at the CPF, and minor remedial work to ensure the facility’s integrity. Now that the CPF is operational, oil production from the Kutubu complex fields is expected to be brought back online progressively during April
● The public is advised that the Kina Facility Rate (KFR) for the month of April 2018 is maintained at 6.25%
● This week’s BPNG auction results in Central Bank Bills were offered for only 28 days and was over-subscribed by K73.0m out of the total amount of K319.4m on offer. This indicates that there was a decrease in appetite for shorter dated securities. The weighted average yield for 28 days remained unchanged at 1.40% from the previous auction week
● This week’s BPNG auction results in Treasury Bills were over-subscribed by K207.8m out of the total amount of K344.2m on offer. This indicates that there was an increase in appetite for longer dated securities. Weighted average yields for 91 days decreased by 0.02% to end at 2.40% compared to last auction, while 182 days, 273 days and 364 days remained unchanged at 4.72%, 6.76% and 8.04% respectively from the previous auction
● Both the KSi Index and KSi Home Index increased by 0.1% to at 5,142.42 points and 0.8% to 10,975.75 points respectively. This was mainly attributed to the rise in share price of banking and financial stock Bank South Pacific by 0.9% to end the week at K9.65
International Market Summary:
● Global stocks results were mixed for the week with growing concerns of trade dispute between the two top economies, US and China when US President Donald Trump instructed US trade officials to consider additional US$100bn in tariffs on China products
● China has responded with a warning that they will take comprehensive measures to safeguard their interests if the US continues this protectionist behaviour
● The Dow Jones Industrial was up 1.7%, S&P 500 was up 0.8% and the NASDAQ was up 0.2% for the week
● Across Eurozone, the FTSE 100 was up 1.7%, DAX was up 1.3% and the CAC 40 was up 1.7% for the week DAQ was up 0.2% for the week.
● In Asia, stocks were affected by continued dispute between US and China. The Nikkei was up 0.5%, the Shanghai Composite was down 1.2% and Hang Seng was down 0.8% for the week
● PGK/USD remained unchanged for the week to close at 0.3075 while PGK/AUD appreciated by 0.2% to end at 0.4007. This was driven mainly by the crosscurrency effect of the USD weakening against major currencies
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KFM Weekly Investment Update: Thursday, 06 of April 2018