KFM Weekly Investment Update: Friday, 23 March 2018 - Kina Bank

KFM Weekly Investment Update: Friday, 23 March 2018

Local Market Summary:
Prime Minister (PM) Peter O’Neill told the PNG Petroleum and Energy Summit that
the government would continue to advance its plans for the resources sector in oil
and gas industry due to its vast potential. PM also said that with the upswing in the
energy prices, it is time for the government to invest and ensure that the next
projects in that sector are developed in a timely basis
Minister for Treasury Hon. Charles Abel said that the country’s economic outlook
remains positive despite the export commodity market performing below
expectations. The total real growth this year was projected at 2.2% mostly driven
by the non-mining sectors and continued improvement in the agriculture, fisheries
and forestry sector. The oil and gold price is also expected to move slightly higher
in 2018
The construction of the Ramu Hydro 2 Project would get underway now that a
three year contract was awarded to a joint venture (JV) firm to start building this
year. The contract was signed between PowerPlus Niugini and Iduc JV to develop
the power generation project. According to managing director Nick Yawi,
PowerPlus Niugini would provide all equipment and machinery required and in
addition it would also provide the technical and project management expertise
 National Superannuation Fund (Nasfund) Chairman Mr Hulala Tokome
announced that Nasfund recorded a profit of K242.4m in the 2017 financial year.
Out of the profit, Nasfund would pay 8.0% to its members which was a 0.75%
increase compared to the 2016 financial year. Nasfund also announced its gross
asset and net asset value of K4.62b and K4.51b up 6.8% and 7.0% respectively
from the previous year
According to Nambawan Super’s (NSL) Chairman Mr Anthony Smare, the
government owed the fund more than K2.0b in unfunded contributions. Deputy PM
and Minister for Treasury Hon. Charles Abel said the government would settle its
debt with NSL via a loan. Hon. Abel also said the government would look at
providing a bond to satisfy the K230.0m exit payments and the remaining debt
could be settled through transferring shares in State Owned Enterprises to the
The Bank South Pacific (BSP) has promoted Daniel Faunt to general manager
Offshore from Senior Manager Pacific Business Liaison. Mr Faunt would assume
formal general management responsibility for all of BSP banking operations in the
pacific islands region. Meanwhile, Mr Haroon Ali is the new BSP country head in
Fiji succeeding Kevin McCarthy who is retiring at the end of 2018
 According to Chief Executive Officer Craig Mr Lennon of Highlands Pacific, the
company has recorded a net profit of K118.9m for the 2017 financial year. This
was compared to a K50.2m loss the previous year. The profit followed an increase
in the valuation of the interest in the Ramu nickel and cobalt mine. The Ramu
nickel and cobalt production were up 55.0% and 51.0% respectively compared to
the previous year
This week’s BPNG auction result in Central Bank Bills offered for 28 days and 63
days was under-subscribed by K47.70m out of the total amount of K587.60m on
offered. This indicates that there was a decrease in appetite for shorter dated
securities. The weighted average yield for 28 days and 63 days remained
unchanged at 1.40% and 2.35% respectively from the previous auction week
This week’s BPNG auction results in Treasury Bills were over-subscribed by
K209.50m out of a total amount of K340.93m on offer. This indicates that there
was an increase in appetite for longer dated securities. Weighted average yields
for182 days, 273 days and 364 days remained unchanged at 4.72%, 6.76% and
8.04% respectively from the previous auction week while 63 days and 91 days was
at 2.37% and 2.42% respectively
● KSi Index decreased by 7.1% to close at 5,141.71 points due to drop in share
prices of OSH and NCM by 0.1% and 12.6% respectively while the KSi Home
Index increased by 0.1% to close at 10,910.71 points underpinned by rise in share
price of BSP by 0.1% to end the week.
International Market Summary:
● The US Federal Reserve raised interest rates in their first policy meeting held
under the new chair, Jerome Powell this week. The Fed revealed they forecast at
least two more rate hikes this year indicating their growing confidence that the
economy and inflation will get a boost from tax cuts and government spending.
● New chair of the US Fed, Jerome Powell said that the US economic outlook has
strengthened in recent months and that the Fed was staying on a path of gradual
rate increase but needs to be on guard against inflation.
● Global stocks slipped for the week as interest rates increased. In the US, Dow
Jones Industrial index was down 4.0%, S&P 500 was down 3.9% and the
NASDAQ index was down 4.2%
● In Europe, the FTSE was down 3.0%, the German DAX was down 2.3% and CAC
40 was down 2.2%
● In Asia, Nikkei was down 4.9%, the Shanghai Composite was down 3.6% and
Hang Seng was down4.3%
● High volatility in the stock market provided a boost for gold which was up 2.8%
while oil prices saw a boost with Brent Crude up 5.0% and Light Crude up 4.2%
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KFM Weekly Investment Update: Friday, 23 of March 2018