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KFM Weekly Investment Update: Friday, 01 July 2016

Local Market Summary

• The National Executive Council has approved plans to sell down 4.3% of national government equity in the PNG LNG Project to a beneficiary group that includes five provincial governments and landowners. The NEC decision, based on a submission signed by PM, Treasurer and Finance Minister would enable
representatives appointed by the Beneficiary Group to commence due diligence work to determine an appropriate purchase price for LNG equity

• The PNG Chamber of Mines and Petroleum has welcomed the recent lodgement and registration of a Special Mining Lease application for the Frieda River coppergold project. Executive Director Greg Anderson in a statement noted the importance of the SML application and said the project represented the next generation of mining operations in the country. And if developed, it has the potential to make a strong contribution to national economy through development of major shared-use infrastructure

• Commenting on the decision by Great Britain (UK) to leave the European Union (Brexit), British High Commissioner to PNG, Simon David Tonge said Brexit will not have immediate implications on the two-way trade between PNG given the fact that UK will still remain a full member of the European Union for up to 2 years

• New Guinea Energy Limited has officially ceased trading on Port Moresby Stock Exchange (POMSoX) as at 22 June 2016. This was announced by the Company Secretary, Justin Mouchacca in April as a result of minimal trading on POMSoX which did not warrant administrative cost incurred by the company

• Kina Asset Management Limited (KAML) chairman Sir Rabbie Namaliu announced at its annual general meeting that the company generated an investment gain of 9.0% and an NPAT of K4.7m. He further announced that as part of KAML’s continued commitment to providing regular returns to shareholders, the company will be paying a dividend of K0.03 toea per share for the 2015 financial year

• City Pharmacy Limited’s (CPL) Stop N Shop yesterday opened its new outlet at Harbour City in Port Moresby. CEO Mr Ravi Singh said K18.5m was invested in establishing the outlet – with K10.0m paid by the East New Britain Government and K8.5m by CPL. The East New Britain Corporation Group of Companies is the business arm of the provincial government

• InterOil Corporation (IOC) has advised Oil Search Limited (OSH) that it has received an unsolicited, conditional non-binding proposal from another party. OSH presumes that the proposal is subject to due diligence and documentation. Further, the IOC board of directors continues to unanimously recommend the OSH transaction to its shareholders. OSH notes that proposed completion of the OSH/IOC transaction’s schedule remains unchanged and related Notice of Meeting and Management Information Circular have now been dispatched to IOC shareholders

• Air Niugini has successfully met all regulatory safety standards and requirements after undergoing audit in order to have its aircraft operating certificate (AOC) renewed. The AOC, which is valid for another 5 years, was presented to Air Niugini this week by the Civil Aviation Safety Authority of PNG (CASA-PNG) to Air Niugini Chairman, Sir Frederick Reiher who said that the AOC was reflective of the
regulators confidence in the airline

• Rio Tinto released an announcement on the Australia Security Exchange (ASX) that it was relinquishing ownership of the Panguna Mine on Bougainville. Port Moresby based, BCL company secretary Mark Hitchcock said Rio Tinto’s shares in BCL will be transferred to an independent trustee. He further said that board of directors are presently taking appropriate advice regarding the matter as consequences of this action may affect the company. As a result of the RIO Tinto announcement, BCL shares have surged 40.0% on the ASX

• This week’s BPNG auctions in Central Banks Bills were offered for 28 day and 63 day maturities with an over-subscription of K477.0m out of a total of K275.0m on offer. The weighted average yield was 1.1% and 2.4%, respectively

• Auctions in Treasury Bills were under-subscribed by K103.5m from a total offer amount of K234.3m. Weighted average yields were 2.6% for 91 days, 4.7% for 182 days, 7.7% for 364 days over the same period

• The KSi closed the week 1.2% higher at 4,627.1 points on the back of an 2.3% increase in Newcrest Mining (NCM) followed by a 0.4% increase in Kina Securities (KSL), the KSHi was also up 1.1% to end at 9,668.4 points supported by a 1.3% gain in local banking stock BSP and 0.6% gain in CCP on the POMSoX

International Market Summary

• European shares rose for a third straight session on Thursday, with expectations of central bank stimulus helping ease jitters over Britain’s vote last week to exit the European Union. The European Central Bank (ECB) said it may need to expand the scope of its bond purchasing program in order to provide extra stimulus within the Eurozone. European stocks gained 6.8%, making the best recovery since 2011

• US markets followed suit in light of the Bank of England (BOE) Governor, Mark Carney’s statement echoing the possibility of Central Bank’s need to pump more stimulus into Britain’s economy in wake of the Brexit shock. The Dow Jones, S&P 500 and Nasdaq ended Thursday’s session higher up 1.3%, 1.4% and 1.3%, respectively

• Asian stocks rose after tracking global stocks’ third day of recovery from the post-Brexit sell-off despite a slew of downbeat data from China and Japan. The Nikkei was up 4.9%, the biggest weekly gain since mid-April

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pdfKFM Weekly Investment Update: Friday, 01 July 2016

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