KFM Weekly Investment Update: Friday, 11 May 2018 - Kina Bank

KFM Weekly Investment Update: Friday, 11 May 2018

Local Market Summary:
● The Treasury Department will meet with businesses to discuss issues of
competition and consumer protection in Port Moresby. The meeting will be held on
17th May at Grand Papua Hotel with major agenda of issues affecting public
service, trade and investment. The outcome of the meeting will be used as part of
the development of National Competition Policy in PNG.
● The PNG Government has been advised by Nambawan Super’s (NSL) Chief
Executive Officer, Mr Paul Sayer and ordered by the court, to meet their obligation
to fund their portion of retired public servants’ monies outstanding since 2016. The
State currently owes NSL a total of K2.2bn and has already allocated K151.0m
towards addressing this issue. The court has ordered the State to K231.0m.
● Hargy Oil Palm (Hargy) located in West New Britain Province recorded a net profit
of K63.0m for the 2017 financial year. According to the company’s General
Manager Mr Graham King, between 1978 to recent there have been natural
disasters which affected the prices. However, the major shareholder, SIPEF
remained confident and committed their investments to Hargy as well as the
Government’s acquisition contributed to this achievement. Hargy’s other
shareholders contribute 40.0%of the company’s volume
● Australia and New Zealand gives A$1.3bn (K3.28bn) and NZ$714m (K1.7bn) aid
package respectively to assist Pacific nations. Australian Finance Minister Hon.
Scott Morrison and New Zealand’s Foreign Minister Hon. Winston Peters
announced the assistance to the Pacific nations. PNG’s Foreign Minister Hon.
Rimbink Pato said the funding boost by Australia and New Zealand will assist
Pacific nations advance their capacities to develop economically and enhance
governance and security in island states.
● A multinational mining company Anglo American has confirmed its withdrawal from
the Solwara 1 seabed mining project in New Ireland Province led by Canadian
company Nautilus Minerals at its Annual General Meeting (AGM) held in London
this week. According to campaign Dr Helen Rosenbaum’s campaign, the
withdrawal was due to the company’s holding minority stake in the project which
was inconsistent with its commitments to sustainability, human rights and
environmental stewardship
● PNG Air announced the delayed of its financial statements for the year ending 31
December 2017 due to issues related to the audit report. This delay would prevent
the company from dispatching its Annual Report to all its shareholders within the
time limit allowed by listing rule no later than 31 August 2018. Thus, the AGM is
deferred to 30 September 2018 from 31 August 2018
● Bank of Papua New Guinea advised that the Kina Facility Rate for May remains
unchanged from the previous month at 6.25%
● This week’s BPNG overall auction results in Central Bank Bills were oversubscribed
by K61.50m of the total amount offered K335.00m. The weighted
average yield remained unchanged for the 28 days term at 1.40%
● This week’s BPNG overall auction results in Treasury Bills were over-subscribed
by K5.86m of the total amount offered K265.86m. The weighted average yields for
182 days was down 0.42% to 4.70% from 4.72% and 273 days and 364 days
remained unchanged at 6.76% and 8.04% respectively from the previous week
● Both the KSi Index and KSi Home Index increased by 4.0% and 0.3% to end at
5,361.92 points and 11,086.43 points respectively attributed to the rise in share
prices of BSP, NCM and OSH
International Market Summary:
● According to the US Labour Department, the consumer price index (CPI) rose
0.20% in April. This was less than economists’ expectations mainly due to
moderation in healthcare prices despite a rise in cost for fuels and rental
accommodation. A higher inflation might have sparked further volatility in the
markets as fears of a steep rate hike pace increase
● Asian stocks ended the week on a higher note as market concerns over interest
rate hikes eased on soft inflation data from the US and easing tensions between
the US and North Korea. Nikkei was up 1.3%, Shanghai Composite was up 2.3%
and the Hang Seng was up 3.9% for the week
● US stocks rallied over the week as markets settled over worries of an aggressive
rate hike pace this year when CPI results indicated softer inflation than expected.
The Dow Jones Industrial was up 2.0%, the S&P 500 was up 2.2% and the
NASDAQ was up 2.7% for the week
● Eurozone stocks also ended the week on positive ground on easing concerns
around interest rate hikes. The FTSE 100 was up 1.8%, the German DAX was up
1.6% and the CAC 40 was up 0.5% for the week
● Oil prices rallied for the week on news of US intention to bring back the sanctions
against Iran, a key oil producer. The US President, Donald Trump withdrew from
the Iran nuclear deal this week and announced his intention to reintroduce the
sanctions against Iran, a move which could affect Iran’s access to US dollar
currency. The sanctions were lifted as part of the 2015 nuclear agreement. Light
crude oil price was up 2.3% while Brent crude oil price was up 3.3% for the week
KFM Weekly Investment Update: Friday, 11 of May 2018