KFM Weekly Investment Update: Friday, 08 February 2019

• According to Hon. Prime Minister (PM) Peter O’Neill, the Asia Pacific Economic
  Corporation (APEC) Summit recently hosted by PNG will have positive impacts
  for the country in the long term. Since APEC, new investors and companies are
  now doing their research and sending teams to visit the country. PM O’Neill
  added that independent observers have done their analysis and predicted that
  PNG could expect billions of kina in investments. The government is in the initial
  stages of the electrification partnership worth US$1.6b with Australia, Japan,
  New Zealand and United States planned to begin in the first quarter of this year.
• Consequently, the Mayur Resources, a developing industrial relations, copper
  gold and power generation platform in PNG recently submitted a Power
  Purchase Agreement (PPA) proposal to PNG Power Ltd (PPL). PPL confirmed
  receiving the proposal, however PPL was uncertain whether the proposal
  showed a commitment that would last 25 years. PPL Acting Managing Director
  Ms Carolyn Blacklock stated that it was looking more towards hydro and solar,
  thus coal power wouldn’t be a part of PPL’s plan.
• Subsequent to the amendments passed in July 2018 to control mergers and
  acquisition mandatory notices, the Independent Consumer and Competition
  Commission (ICCC) indicated positive responses from the business
  community. The amendments made certain that any business pursuing to
  acquire another business were to submit an application to ICCC for
  authorization under sections 81 and 82 of the ICCC Act. Thus, resulting in a
  rising demand for ICCC’s processing on the part of the competitive markets and
  fair trade division.
• Nambawan Super Limited (NSL) Chairman Anthony Smare acknowledged
  receiving the complete K146.0m unfunded state share, which was committed
  for retired public servants per the 2018 Supplementary Budget. Mr Smare said
  the payments received will enable benefits to be allocated to former public
  servants who exited employment up until September 2018. Additionally, the
  2019 Budget committed a further K150.0m payable this year which NSL will
  continue to engage dialogue with the Deputy PM and Treasurer Hon. Charles
  Abel on this.
•  Westpac Banking Corporation Limited (WBC) announced the new appointment
  of Mr Elliott Griffin as Head of Corporate and Commercial banking. Mr Griffin is
  an experienced corporate banker and leader who has been with the WBC
  Group since 2009. He held senior roles with WBC in Australia, Solomon Islands,
  Vanuatu and recently Fiji. His role starts effective this week.
• Pursuant to the publication in 2nd January 2019, Cobalt 27 Capital Corp (Cobalt
  27) entered into a Scheme Implementation Agreement (SIA) with Highlands
  Pacific Limited (HIG) to acquire all its shares, Cobalt 27 is currently in
  discussions with PanAust for a buy back arrangement. Both parties are in
  agreement that if the proposed Scheme of Arrangement proceeds and is
  fulfilled, Cobalt 27 will attain HIG shares currently held by PanAust. This will be
  in return for HIG transferring its 20% interest, in the Frieda River Joint Venture
  to PanAust. Thus, making PanAust a 100% shareholder in the US$6.0b Freida
  project.
• The Board of PNG Air Limited announced the resignation of Mr Simon David
  Woolcott as a Director of the company effective 2 February 2019. Mr Woolcott’s
  resignation was due future commitments.
• This week’s BPNG auction in Central Bank Bills were under-subscribed by
  K18.00m out of the total amount offered K382.50m. This indicated that there
  was a decrease in appetite for shorter dated securities. The weighted average
  yield for 28 days remained unchanged at 1.39% from last week. There were no
  bids for 63, 91 and 182 days.
•  This week’s BPNG auction in Treasury Bills were over-subscribed by K166.15m
  out of the total amount offered K221.57m. 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
  decreased by 0.20 points and 0.32 points to 6.11% and 6.84% respectively from
  the previous week. There were no bids for 63, and 91 days.
• Kina Securities Index was down 0.1% to 5,171 and Kina Securities Home Index
  closed higher by 0.2% at 11,482 points respectively. This was mainly attributed
  to drop in BSP and OSH price by 0.1% and 0.3% to K10.30 and K17.95 and
  rise in share prices of CCP and KSL to close by 3.7% and 1.5% to close at
  K1.40 and K2.70 respectively.

International

• US stocks surged mid-week followed by a slight decline as investors feared that
  the Trump administration would not reach a deal with China before the March
  deadline. Dow Jones and NASDAQ index closed higher by 0.4% and 0.3% at
  25,169 and 7,288 points respectively while the S&P 500 dropped by 2 bps to
  end at 2,706 points.
• Australian stocks rallied to the highest since September 2018 with major banks
  bouncing back after the Haynes report was released. Both the S&P 200 and
  S&P 50 were up by 3.6% and 3.9% at 6,071 and 5,990 points respectively
•  UK stocks began to falter as the Bank of England projected the weakest
  economic outlook for UK since 2009 however for the week, the FTSE 100 was
  stable by positive 1.0% at 7,093 points.
• Asian stocks lost ground on renewed anxiety over trade and global economic
  slowdown, with sentiment not helped by the absence of any positive signs for
  a resolution in the US-China trade row. Nikkei 225 index was the most
  affected having declined by 2.2% to 20,333 points
• Oil prices began to come under pressure due to renewed worries of a global
  economic slowdown and reports that Libya to increase production. Both Light
  and Brent Crude dropped by 5.4% and 2.4% to US$52.27 and US$61.25 per
  barrel respectively.

KFM Weekly Investment Update: Friday, 08 of February 2019