KFM Weekly Investment Update: Friday, 27 January 2017 - Kina Bank

KFM Weekly Investment Update: Friday, 27 January 2017

Local Market Summary
• Prime Minister Peter O’Neil welcomed Javier Rielo, the new exploration and production senior vice-president of TOTAL in Asia Pacific who visited the country during the week. He said the government appreciated TOTAL for its investment confidence in Papua LNG project and stated that it was a sound investment as energy prices are picking up with positive long term outlook for the energy sector
• The Investment Promotion Authority (IPA) achieved 85.0% of its 2015-2017 Strategic Plan targets. IPA MD Clarence Hoot said these were the results of defined Key Performance Indicators (KPIs) in the strategic plan which were used effectively to measure performance. He revealed that reviewing of a new three-year road map 2018-2021 is currently underway
• The people of Western Province have been granted 33.0% of Ok Tedi equity interest by the National Government. This materialized during the signing of the Benefit Sharing Agreement in Alotau which involves six mine area villages and 152 villages from the Community Mine Continuation Agreement regions
• The landowners from gas fields of PNG LNG project requested Kumul Petroleum Holdings Limited (KPHL) to pass a solvency test before they purchase the Kroton equity believing that the company is in debt of $US3b (K8.98b). However, KPHL MD Wapu Sonk said the firm has a strong balance sheet and is solvent. He reiterated that the data used by landowners does not include the 2016 financial data which is undergoing audit by the Auditor’s Generals Office
• Oil Search MD Peter Botten in releasing the company’s 2016 fourth quarter results announced that the company recorded its highest production results in 2016. He stated that this was culminated through a strong performance in PNG LNG project and its own oil operations together with the rise in global oil and gas price which lifted the firm’s total revenue to US$345.6m, 12.0% increase from the third quarter results
• RamuNiCo Management announced an increase in 2016 fourth quarter performance results during its 2017 Annual Work Conference. It revealed that nickel outputs were at 2,645, 2,764 and 2,711 tons from October, November and December 2016. It states that these were above design capacity at 98.7%, 100.0%, and 101.2% respectively. RamuNiCo president Gao Yongxue explained that the results were achieved through the performance of its staff, management and stakeholders
• National Development Bank’s (NBD) MD Mr Moses Liu said the bank is expected to be a commercial bank soon and that proposals were currently before the government and stakeholders for review. He stressed that NDB has a challenging growth strategy for the medium- term to become more profitable and operate in efficient way and is currently working on upgrading its banking facilities around the country
• Bank South Pacific (BSP) CEO Robin Fleming revealed that competition for BSP Capital remained strong in 2016. He stressed that meeting client expectations and service were the key components for last year. He added that business growth was strong in funds management with K1.45b currently under management with custodial and nominee remained stable. He further stated that BSP Capital won the local investor services for Oil Search, assisting registry work of Computer Share
• This week’s BPNG auction in Central Bank Bills were offered for 28 days and 63 days with an under-subscription of K47.0m out of a total of K883.9.0m on offer. The weighted average yield was 1.14% and 2.34% respectively
• This week’s BPNG auctions in Treasury Bills were under-subscribed by K75.8m out of the K225.4m on offer. Weighted average yields were 2.55% for 91 days, 4.72% for 182 days and 7.80% for 364 days
• The KSi Index closed 1.1% higher at 4,814.95 points underpinned by a rise in share price of NCM. On the same note, the KSi Home Index concluded the week 0.6% higher to close at 10,691.02 points driven by the increase in share price of CCP
International Market Summary
• US stocks closed mixed on the back of corporate earnings results which exceeded analyst expectations on the bottom line. The Dow Jones, in particular, ended at a new record high of 20,100.91 points (+1.4%) while the S&P 500 and Nasdaq were up 1.1% and 1.8%, respectively
• Asian stocks rallied on the back of a positive session on Wall Street, despite concerns over Trump’s protectionist policies. The Nikkei rose 1.7% to end at 19,467.40, Hang Seng ended at 23,360.78 points and Shanghai ended at 3,159.17 points
• In the final 3 months of 2016, Britain experienced a 0.6% increase in economic growth compared to the previous quarter which challenged warnings that June’s vote for UK to leave the EU would be detrimental to the country’s economy. Britain’s minister for Finance, Philip Hammond observed it was further evidence of fundamental strength and resilience but noted that there may be uncertainty expected as the country adjusts.
• Australian shares were also higher led by the financial sector as trading resumed after Australia Day (Public Holiday). The ASX caught up with the Wall Street rally as the “Big Four” banks led gains while only materials were weighed down by lower commodities. The ASX 200 was up 1.0% to end the week at 5,713.99
• Oil headed for a second weekly increase as OPEC and other producing nations continued with output cuts to reduce bloated global inventories and stabilize the market. Oil has fluctuated above $50 a barrel since 11 nations including Russia last month joined with the Organization of Petroleum Exporting Countries to trim supply. While Saudi Arabia says more than 80 percent of the targeted cuts have been implemented since the deal took effect on Jan. 1, the International Energy Agency predicted a gain in U.S. shale output as prices rise
• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD appreciated by 0.5% for the week to end at 0.4186, while AUD/USD depreciated by 0.5% to end the week at 0.7527

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KFM Weekly Investment Update: Friday, 27 January 2017