KFM Weekly Investment Update: Friday, 19 January 2018 - Kina Bank

KFM Weekly Investment Update: Friday, 19 January 2018

Local Market Summary
• Prime Minister (PM) Peter O’Neill would be the first Leader of a Pacific Island Nation to attend the World Economic Forum Annual meeting in Davos-Klosters Switzerland. PM O’Neill said that PNG’s chairmanship of APEC would be an important item of discussion for him meeting in Davos
• Deputy PM and Treasury Charles Able said that the government is committed to deliver the K14.0b national budget for 2018 in full. This was revealed when Treasury received Enga’s provincial government budget of about K336.0m. Hon. Able further said that the government will drive the economy, drive cost measures and ensure that expenditures are met in timely manner and goods and services can be delivered effectively
• Minister for Public Enterprise and State Investments Hon. William Duma confirmed the appointment of Ms Carolyn Blacklock as the new acting director for PNG Power to serve for an indefinite period until the Kumul Consolidated Holdings advertises the position and makes a permanent appointment
• Nautilus Minerals have announced the appointment of Mr Tariq Al Barwani to the role of non-executive Chairman. The announcement follows the company’s notice of agreed bridging loans of K21.0m (US$7 m as working capital requirements and facilitate payments to continue the development of the seafloor production system to be used at the Solwara 1 Project
• According to ExxonMobil Development company president Mr Liam Mallon, the ExxonMobil gas reserves are set to increase with an expected reservoir encountered in the drilling of P’nyang South-2 well in Western province. The drilling results were evaluated and the resources potential would be developed in collaboration with joint venture partners. ExxonMobil is currently evaluating the well results and together with its co-venture partners would assess the P’nyang field resource potential and development pathway
• Kina Asset Management announced its Net Tangible Asset of K1.30 per share as of 31 December 2017 via Port Moresby Stock Exchange
• According to Bank South Pacific (BSP) group Chief Executive Officer (CEO) Robin Fleming, BSP finally renamed its Cambodia expansion to BSP Finance. This came after the bank’s entry into the South-East Asia market in May 2017. Meanwhile, the BSP board is confident that customers will find BSP Finance a helpful and professional business partner in Cambodia
• This week’s BPNG auction results in Central Bank Bills were offered for 28 and 63 days and was over-subscribed by K123.1m out of the total amount of K529.4m offered, indicating an increase in appetite for shorter dated securities. The weighted average yield for 28 days decreased by 0.01% to 1.40% from the previous week while 63 days remained unchanged at 2.35% from the previous month
• This week’s BPNG auction results in Treasury Bills were under-subscribed by K4.0m out of a total amount of K128.3m on offer, indicating a decrease in appetite for longer dated securities. Weighted average yields for 182 days, 273 days and 364 days remained unchanged at 4.73% 6.76% and 8.04% respectively from the previous week
• Both KSi Index and KSi Home Index decreased by 1.5% and 0.1% to end at 5,490.53 and 10,919.98 respectively which were mainly underpinned by the decrease in share prices of BSP, KSL and OSH
International Market Summary
• Markets continue to monitor possibility of a US government shutdown as the federal spending authority is set to expire today.
• Meanwhile, China growth results for the fourth quarter in 2017 indicated better than expected outcome. This provided a boost for prices in metals in the commodity markets.
• Despite a slight drop in Dow Jones index during the week due to weakness in carmakers and real estate sector, US equities ended the week on positive ground. S&P 500 was up 0.58%, Dow Jones was up 0.4% and the NASDAQ index was up 0.5% for the week.
• US 10-year bond yields were up this week to 2.64% as chances of government shutdown after temporary funds shortage increased.
• Asian stocks fared well for the week despite concerns over the increase in Treasury yields. The Nikkei index was up 0.7% and Hang Seng index was up 2.2% and Shanghai Composite was up 1.4% for the week.
• News of possible temporary US government shutdown affected the US dollar performance against major currencies. AUD/USD was up 1.7%, GBP/USD was up 2.7% and EUR/USD was up 1.8% for the week

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KFM Weekly Investment Update: Friday, 19th of January 2018