KFM Weekly Investment Update: Friday, 08th September 2017 - Kina Bank

KFM Weekly Investment Update: Friday, 08th September 2017

Local Market Summary
•Prime Minister (PM) Peter O’Neill attended the 48th Pacific Islands Forum Leaders’ meeting in Samoa to brief all attendees on the progress of hosting one of the biggest events in the Pacific the 2018 APEC Summit. Mr O’Neill reiterated that the APEC meeting in PNG will be a unique experience in the Pacific Region.PM O’Neill further said that PNG will maintain the highest level of security to ensure that the safety of all Leaders, Delegates and Officials are guaranteed
•Coffee Industry Corporation (CIC) chief executive officer (CEO) Charles Dambui said that despite the announcement of coffee berry borer (CBB) pest that posed threats on the coffee production, the coffee export levels have been constant. However, CEO said that the effect on the spread will definitely be felt next year.CEO Dambui also said that last year was a good year for CIC to generate K649.0m from the total of 1.12 bags of coffee exported. This year with the impact of CBB, CIC managed to contain it and the product and export level is still held constant with no drastic drop in the export or even production
•The National Statistics Office has published their Consumer Price Index (CPI) report for June quarter 2017. According to the report, CPI inflation for the 12 months leading to June is at 5.8% and 1.2% for the quarter. Key contributors to this quarter’s inflation include Betelnut at 5.1%, Air fares at 8.7%, Takeaway foods at 1.8%, and other goods/services at 1.4% and Household maintenance goods at 2.4%.
•For the CPI towns, Lae recorded the highest CPI inflation for the quarter at 1.8% followed by Port Moresby at 1.1% then Goroka-Hagen-Madang group at 0.9% while the lowest for the quarter was seen in Alotau-Kimbe-Rabaul group at 0.7%. On a rolling 12 months basis, Lae is also leading with a 12-month inflation of 7.4% followed by Port Moresby with 5.9% then Goroka-Hagen-Madang with 5.5% and Alotau-Kimbe-Rabaul with 4.2%.
•Chairman of Women’s Micro Bank, Ricky Mitio, announced that they were offering 7.0m shares to members at an issuing price of K1.00 per share. The Chairman said that the offer is being made in order to raise capital and strengthen the bank’s capital adequacy and improve on its performance in general. General Manager, Gunanidhi Das, indicated that the outcome of this offer shall form basis for any decisions on issue of additional shares later on. The bank currently has a net worth of K3.0m and balance sheet of K7.8m
•Kina Asset Management (KAML) announced a half year net profit after tax of K5.0m up 48.2% compared to the previous corresponding period. KAML’s board was pleased to announce the payment of an interim dividend of K0.02 toea per share for 2017 payable on the 4th of October 2017. Furthermore, KAML also announced the dividend reinvestment plan at the discount rate of 2.5% on this dividend
•The Chairman of OK Tedi mining, Sir Moi Avei, announced an interim dividend of USD 50.0m/K160.0m payable in September. Sir Avei said that the dividend was at the back of the strong performance of the mine for the half year, 2017. Furthermore, the board also approved an investment of USD200.0m to replace and relocate the mine in-pit crusher which will allow access to higher grade ore
•The Bank of Papua New Guinea (BPNG) announced that the Kina Facility Rate for the month of September will be maintained at 6.25%
•This week’s BPNG auctions in Central Bank Bills were offered for 28 days only with over-subscription of K30.0m out of total amount of K284.5m on offer. The weighted average yield remained unchanged at 1.37% from the previous week
•This week’s BPNG auctions in Treasury Bills were over-subscribed by K3.4m out of a total amount of K214.8m on offer. Weighted average yields for 91 days was at 2.50% while 182 days, 273 days and 364 days remained unchanged from the previous week at 4.74%, 6.71% and 7.99% respectively
•The KSi Index increase by 4.3% to end the week at 5,203.17 points while KSi Home Index remained unchanged from the prior week at 11,104.29 points.
International Market Summary
•Government data released this week revealed that Japan’s economic growth in the second quarter was much lower than expected, disappointing many who were hoping for a pick-up in domestic growth. Although the disappointing result for the quarter may affect confidence in the Japanese economy, analysts maintain that the economy could still sustain a stable recovery as improving global demand supports exports and employment data improves.
•Asian stocks had positive results for the week as positive data on China’s import and exports indicate stable expansion in the Chinese economy despite policy tightening
•Oil prices recovered for the week as stocks continued to decline as refineries which were first affected by Hurricane Harvey fell under threat with yet another Hurricane Irma. Brent crude was up 3.8% while Light crude was up 3.9% for the week
•The PNG Kina continued to depreciate this weak a further drop against the US dollar of 0.3% this week to 0.3125 from 0.3135 compared to a drop in the previous week of 0.32% from 0.3145 where it’s been unchanged for over 4 months to last week.
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KFM Weekly Investment Update: Friday, 08th September 2017