KFM Weekly Investment Update: Friday, 24 March 2017

Local Market Summary
• Trade, Commerce and Industry Minister Richard Maru said the country will soon have a trade policy to guide all its trade negotiations. The number one principle in the policy is national interest. He will submit to Cabinet next week and table it in Parliament if approved. He advised that the trade functions have been shifted between Trade Commerce and Industry and the Department of Foreign Affairs and Trade over the years and there was no policy in place
• Coffee Industry Corporation (CIC) CEO Charles Dambui said the Coffee Berry Borer can have a disastrous effect on coffee production in the country if it spreads to all coffee growing provinces. The presence of the borer plots would mean a drop in coffee production to between 40.0% and 60.0% and this would result in farmers losing a lot of money and in turn affect the revenue of families and the country. CIC is working closely with National Agriculture and Quarantine Inspection Authority to ensure these pests do not spread to other coffee-growing provinces
• Furthermore, Mr Dambui advised that farmers could see an increase in the cost of production and labour given the spread of the borer in some highlands provinces. The cost of production per hectare is about K1,200.00, but with the introduction of the pest, the cost might go up and the farmers have to apply some management measures
• Geopacific Resources released new results indicating higher grade gold intersections at the Kulumadau deposit in Woodlark Gold Project in Milne Bay Province. Geopacific MD, Ron Heeks mentioned that the good results from infill and extensional drilling added to the Reserve inventory of the project and provided the potential to extend both the length and depth of the pit designs
• The holders of Pacific Balanced Fund (PBF) electronically received the outstanding distribution payments into their accounts. Kennedy Wemin, the CEO of Melanesian Trustee Services which manages PBF announced the electronic transfers and stated that the innovation indicated an important part in the transformation of PBF. He reiterated that investors of former Investment Corporation Fund of Papua New Guinea (ICFPNG) were verified and are receiving dividend payments from years starting in 2013 to 2015
• Steamships Trading Company (SST) declared a final dividend of K0.35 per share. The stock trades ex dividend on the 27 April 2017 with the record date on the 28 April 2017. Payment expected on the 9th June 2017
• Bank South Pacific (BSP), released details of their FY 2016 results in their Key Disclosure Statement this week. The Group’s Net Profit after Tax (NPAT) increased 21.0% to K643.5m (2015: K531.9m), the result attributed to the continued growth of its loan book and other non-interest income streams. Capital adequacy sits comfortably above the Central Bank requirement (12.0%) at 23.1%, and likewise Tier 1 Capital to Total Assets ratio of 9.3% remains above regulation. The Group’s assets totaled K20.8bn at the end of FY16, representing growth of 14.5% from 2015
• As previously announced BSP is seeking a secondary listing of its ordinary shares on the Australian Stock Exchange (ASX) during 2017. The Proposed Listing is an initiative being undertaken to improve the liquidity of the Company’s shares for the benefit of both existing shareholders and the Company. The board of the Company has considered a range of options to improve the liquidity of the Company’s shares and believes that the Proposed Listing would be in the best interest of all shareholders
• This week’s BPNG auctions in Central Bank Bills were offered only for 28 days with an under-subscription of K504.0m out of a total of K629.0m on offer. The weighted average yield was 1.20%
• This week’s BPNG auctions in Treasury Bills were over-subscribed by K4.0m out of the K265.9m on offer. Weighted average yields were 4.73% for 182 days and 7.82% for 364 days
• The Kina Securities Index rose 13.10% ending the week at 5,485.12 points due to NCM share price movement by 26.0%. Similarly, the Kina Securities Home Index ended the week 10,980.44 up by 0.1% for the week
International Market Summary
• UK stocks closed slightly higher on Thursday, underperforming the broader European markets as a rally in the pound limited gains after retail sales beat expectations
• Asian markets dropped on Wednesday, led by the Nikkei’s fall of more than 2.0%, following overnight declines in US financial markets as investors re-evaluated their Trump trade optimism. US dollar have broadly rallied in the wake of President Donald Trump’s election in November, sustained by his talk of a tax overhaul and infrastructure investment
• Australian shares closed the week modestly higher supported by a lift from financial stocks by the end of Friday, particularly NAB and Westpac which increased 1 per cent and 1.4 per cent respectively on the back of moves to increase mortgage rates. The S&P/ASX 200 closed the week at 5,753 points
• The buying in miners and energy stocks helped the ASX claw back some of Wednesday’s heavy losses, while an oil price recovery lifted energy names. The benchmark S&P/ASX 200 Index added 0.40%, taking it back above the 5,700 mark to 5,708, while the broader All Ordinaries also rose 0.40%
• Oil prices ended the week lower with light crude dipping $47.84 or 1.9% so as Brent crude at US$50.67 down 2.1%
• PGK/USD declined by 0.2% for the week to close at 0.3145, PGK/AUD appreciated by 0.7% to end at 0.4127, while AUD/USD dropped by 0.9% to end the week at 0.7613
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KFM Weekly Investment Update: Friday, 24 March 2017