KFM Weekly Investment Update: Friday, 19 February 2016

Local Market Summary:

•Hon Prime Minister Peter O’Neill launched the Small and Medium Enterprises
Policy in Port Moresby the government’s focus in supporting citizens through
SME businesses. The launching was witnessed by government ministers,
business executives, local SME representatives and heads of missions

•National Statistics Office (NSO) published the December Consumer Price Index
(CPI) report this week announcing a CPI movement of 6.4% for the 12 months to
December and 1.9% for the quarter. Largest contribution to CPI movement came
from the Alcohol, tobacco and Betelnut CPI group. For CPI towns, Port Moresby
recorded the highest CPI movement (refer graph)

•UNDP announced its partnership with National Fisheries Authority to design a
project aimed to improve the condition of fisheries and conserve their habitats in
the Arafura-Timor Seas region. The region’s marine ecosystem has come under
increased threats from indefensible fishing activities, marine and land-based
pollution. The project is expected to commence in September 2016 through to
2019 as this would help recover and sustain fisheries, restore degraded habitats,
reduce land-based and marine sources of pollution, protect key marine species
and adapt to the impacts of climate change

•PNG Forest Industries Association, CEO Mr Bob Tate reported that there has
been a decline in export demand from the industry’s biggest export destination,
China due to a slowdown in China’s economy. Mr Tate stated that this could
mean a very rapid weakening of export prices

•The Mineral Resource Authority (MRA) is still awaiting response from the New
Guinea Gold a Canadian company which managed the Sinivit Mine in East New
Britain Province. The Canadian company had abandoned the mine in September
2014 after accusing the Government and MRA for their licence renewal

•The Teachers Savings and Loan Society announced its plans to include the
private sector after the new Savings & Loans Societies Act 2015 is gazetted by
the Government. CEO, Michael Koisen confirmed that the society will be
expanding their services to people in the rural areas who are currently missing
out on financial services and products provided by the formal banking system

•BSP Group reported a Net Profit after Tax of K531.9m, up K24.6m or 5.0% from
K507.3m in the previous corresponding period (pcp). The positive result driven
by the bank’s overseas operations and subsidiaries. The bank’s total assets
increased significantly by 15.0% to K18.3bn from K15.9bn in pcp

•Kina Asset Management Limited reported a net tangible asset of K1.03 as at

•Newcrest Mining Ltd has reported a 55% decline in its first half profits driven by
low commodity prices despite meeting its production guidance. The company’s
net profit for the six months ended December 31, fell to $US81.0m from
$US180.0m the previous year. Notwithstanding, the company expects an
improvement in performance of the back of an increase in gold prices

•This week’s BPNG auctions in Central Banks Bills were only offered for 28 & 63
days with a total over subscription of K76.0m out of the K442.0 total on offer for
both terms. The weighted average yields each were 1.20% & 2.31%

•This week’s BPNG auctions in Treasury Bills were undersubscribed by K72.8m
out of a total K286.0m on offer with no indication for the short term securities.
The weighted average yield for 91 days was 2.73%, 182 days was 4.70% and
364 days was at 7.72%

•The KSi Index ended the week up by 0.56% to close at 3,369.98 from 3,351.29
points while the KSi Home Index was down 0.18% to end at 9,343.48 point from
9,359.98 points

International Market Summary:

•Minutes from the US Federal Reserve meeting this week indicated that the
policymakers were concerned about the increase in market volatility since their
decision to begin raising rates in December. The minutes said: “Members
observed that if the recent tightening of global financial conditions was sustained,
it could be a factor amplifying downside risks,” to the US economy

•US stocks rallied, with the Dow Jones Industrial Average rising more than 250
points, as the year’s most-battered shares continued to recover and energy
shares climbed with oil prices. The rally this week occurred as oil climbed more
than 5.0%, Federal Reserve officials expressed caution on the economy and
data on manufacturing was better than forecast

•Australian Dollar has retreated after a mid-week rally following the break-down of
discussions between certain OPEC member countries to cut production. The oil
price and Australian dollar declined as hopes of an agreement to curb production
came to tatters with Saudi-Arabia refusing to cut its production levels

•Chinese markets ended the week 3.2% higher with the Shanghai
composite finishing at 2,853.02, gaining for the week after a week long holiday
for the Lunar New Year celebrations

•Crude oil prices declined for the week after inventories in the US rose to weekly
high, adding to a persistently stubborn global glut. The Energy Information
Administration data indicated US crude stocks rose by 2.1m barrels last week to
504.1m barrels, a fresh weekly record high

•PGK/USD remained unchanged for the week at 0.3290, PGK/AUD ended up by
0.1% to close at 0.4623 as AUD/USD ended, up by 0.2% to close at 0.7120

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pdfKFM Weekly Investment Update: Friday, 19 February 2016

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