KFM Weekly Investment Update: Friday, 15 November 2018 - Kina Bank

KFM Weekly Investment Update: Friday, 15 November 2018

  • Deputy Prime Minister and Treasurer Hon. Charles Abel presented in
    Parliament the National Budget for 2019 with total expenditure at K16.1bn
    while total revenue at K14.3bn which is a deficit of K1.9bn.
  • The National Budget estimates Real GDP growth for 2019 to be 4.0% and
    increase over the next 5 years to 6.3% in 2023.
  • Total Expenditure is higher than the estimate for 2018 Budget by 9.6%. The
    Government aims to focus on key expenditure including SMEs, District
    Services Improvement Programs (DSIP), Agriculture, Health Care and
    Education. The Budget outlines the breakup of expenditure to be K10.6bn
    for Operational expenditure while K5.5bn for Capital expenditure.
  • Total Expenditure is higher than the estimate for 2018 Budget by 9.6%. The
    Government aims to focus on key expenditure including SMEs, District
    Services Improvement Programs (DSIP), Agriculture, Health Care and
    Education. The Budget outlines the breakup of expenditure to be K10.6bn
    for Operational expenditure while K5.5bn for Capital expenditure.
  • Highlights in the Budget include: Health sector K1.5b, Education sector
    K1.3bn, Transport sector K1.3bn, Economic sector K742.0m, Administration
    K2.0bn, Renewable sector K262.0m, Small Business sector K4.4m,
    Tourism sector K50.0m and Provincial sector K3.0bn while funding for
    Services Improvement Programs (Provincial Services Improvement
    Programs and DSIP) of K1.0bn has been reallocated under Department of
    Implementation and Rural Development’s budget.
  • Total debt to GDP ratio is estimated at 30.3% for 2019 and expected to
    reduce to 25.9% by 2023.
  • The total revenue in the Budget consists of K10.8bn tax revenue, K0.94bn
    in grants and K2.5bn from others including dividends, fees and charges.
  • Total Revenue as a percentage of GDP is estimated to be 16.1% for 2019
    and drops over the 5 years to 14.8% by 2023.
  • Several tax bills were also amended to assist in the Government’s 2019
    Budget for revenue such as the Custom Tariff Bill 2018 to increase tariff
    rates for a number of imported goods; Exercise Tariff Bill 2018 that
    recommends to suspend the 5.0% monthly indexation applied to alcohol
    base rates, tobacco base rates and an amendment to remove several
    exercisable luxury items under “other goods” such as TVs and microwaves,
    will be now considered as household needs.
  •  Other highlights include the reduction of personal income tax and GST zero
    rating removal for companies exposed to the resources sector. The taxfree
    threshold has been increased from K10,000.00 to K12,500.00 per
    annum. All supplies made to mining, petroleum or gas companies will now
    be subject to the full 10.0% GST rate.
  • National Airports Corporation (NAC) signed contracts worth around
    K220.0m for Madang, Wewak, Vanimo, Wapenamanda, Tari, Tokua and
    Nadzab Airports. The signing of contracts for the airport projects were under
    the Government’s Civil Aviation Development Investment Program in
    partnership with Asian Development Bank. The funding allocation are
    Madang-K77.5m, Wapenamanda-K38.56m, Wewak-K50.9m and Vanimo-
    K35.9m.
  • Kina Asset Management’s Net Tangible Asset as at 31 October is at K1.29
  • This week’s BPNG auction in Central Bank Bills were over-subscribed by
    K28.0m out of the total amount offered K329.5m. This indicated that there
    was an increase in appetite for shorter dated securities. The weighted
    average yield for 28 days remained unchanged at 1.39% from the previous
    week while there were no bids for 63,91 and 182 days.
  • This week’s BPNG auction in Treasury Bills were under-subscribed by
    K159.2m out of the total amount offered K236.4m. This indicated that there
    was a decrease in appetite for longer dated securities. The weighted
    average yields for 182, 273 and 364 days remained unchanged at 4.73%,
    6.75% and 8.05% respectively from the previous week. There were no bids
    for 63 and 91 days.
  • The KSi Index ended the week lower by 0.1% to close at 5,411.96 points
    underpinned by the fall in share price of Oil Search by 0.2% at K20.45 while
    the KSHi Index remained unchanged from the previous week at 11,441.71
    points.


    KFM Weekly Investment Update: Friday, 15th of November 2018