KFM Weekly Investment Update: Friday, 25 May 2018
Local Market Summary:
● Prime Minister Peter O’Neil challenged Super funds to invest in mining, agriculture and tourism. He made the statement during parliament debate that the government will shift its focus and regulate resource laws to benefit landowners, provincial governments and the state
● Parliament Speaker Job Pomat certified five Acts passed by parliament which included Ok Tedi Mine Continuation (ninth supplemental) Agreement (Amendment) Act 2018. The legislation empowers the mining firm to access additional funding of US$35.0m held under financial assurance fund purposely to invest in mine expansion and operations
● The Canadian Global vanilla buyer Aust & Hachmann reported that PNG’s vanilla has been impressive to date and will be the second best in the world after Madagascar. In its report, the buyer made comments based on the product’s dominant market position with a price difference of US$150-US$200 per kilogram in contrast to Madagascar. The prices of Madagascar’s vanilla is currently trading between US$600 to US$650 which placed PNG prices between $US400 and US$450 per kilogram
● Bougainville Copper Limited (BCL) announced non-payment of dividends to all shareholders after a consolidated loss of K7.30m after tax. This was revealed during the firm’s Annual General Meeting held in Port Moresby during the week. BCL Chairman Mel Togolo said the firm generated K7.63m in interests, dividends and realised gains on sale of investments. He outlined the expense of K14.83m incurred during 2017 financial year and reassured the shareholders that the loss of K7.63m was against a budgeted loss of K15.2m. He thanked the continuous support of stakeholders and reaffirmed that the firm remained focused to mitigate challenges in the year ahead
● Kumul Petroleum Holdings Ltd (KPHL) will be marketing gas on behalf of PNG government when the Papua LNG project commence operations. KPHL has partnered with TOTAL SA to have the government’s share of LNG on the market. KPHL will send two of its employees to undergo training in Paris that will equipped them to sell LNG to potential buyers on the market
● Bank South Pacific (BSP) announced the 2017 full year dividend of K0.91 to be paid to shareholders. BSP CEO Robin Fleming presented in its annual general meeting that this will bring the firm’s total dividend to K1.23. He said BSP delivered solid performance despite volatile economic environment during 2017. He added that the firm is focused on developing the digital strategy and the implementation of core banking system to maintain its market position
● Kina Securities recorded a full year profit of K30.0m for 2017 year despite economic challenges, CEO, Greg Pawson announced at the Annual General Meeting held this week. He went on to add that in spite of subdued economic conditions and tight competition in the financial service sector, KSL was still able to grow its market share from 4.8% to 5.8% in 2017. The CEO also announced a loan book value of K750m and total deposits at K1.0bn attributing the company’s growth to positive demand for the bank’s home loan and cash management products
● Credit Corporation (CCP) announced the appointment of Johnson Kalo as acting chairman of its board. Mr Kalo will be acting in the interim until the Board appoints a new chairman. The announcement included the retirement of Graham John Dunlop from the board and the resignation of William Lamur both effective on 27th June 2018
● This week’s BPNG auctions in Central Bank Bills were over-subscribed by K36.3m out of the K729.5m offered. The weighted average yield were 1.40% for 28 days and 2.35% for 63 days
● This week’s BPNG auctions in Treasury Bills were under-subscribed by K9.75m out of the K240.4m offered. The weighted average yields were 2.36% for 63 days, 2.40% for 91 days, 4.72% for 182 days, 6.76% for 273 days and 8.04% for 364 days respectively
● The KSi Index remained unchanged at 5,363.03 points while the KSi Home Index increased by 0.2% to 11,119.17 points mainly attributed to the rise in share price of banking and financial stock Bank South Pacific by 0.3% to end at K9.87
International Market Summary:
● Global stocks had mixed results following the announcement from US President, Donald Trump, that he had cancelled the North Korea summit after what the White House called ‘a trail of broken promises’ by the North Koreans.
● Dow Jones Industrial was up by 0.4%, S&P 500 was up by 0.6% and the NASDAQ was up by 1.0% for the week
● Asian stocks also had a shaky week following the cancellation of the summit by US President. Nikkei was down by 2.1%, the Shanghai Composite was down by 1.8% and Hang Seng was down by 1.5% for the week.
● Oil prices fell as Russia indicated possibly increasing production output levels after maintaining a production limit in line with the OPEC-led agreement since 2017. At the moment the downside risk to oil prices may be limited by ongoing geo-political tensions.
KFM Weekly Investment Update: Friday, 25 of May 2018