KFM Weekly Investment Update: Friday, 02 March 2018

Local Market Summary:

• Prime Minister Peter O’Neil declared a State Of Emergency in four provinces
which are Hela Province, Southern Highlands Province, Western Highlands
Province and Enga Province that were worst hit by the sudden 7.5 magnitude
earthquake on Monday. PM O’Neil further added that K450.0m will be utilised
on disaster relief, service and infrastructure restoration

• On the other hand, Exxon Mobil PNG has safely shut down the Hides Gas
Conditioning Plant as well as its Wellpads following the earthquake in the
Highlands at 3:44am on Monday. The shutdown is for precaution until full
assessment can be completed on damages sustains during the earthquake

• The National Airports Corporation signed a contract with a Chinese company
called Sino-Hydro to collaborate in the expansion of Gurney Airport in Milne
Bay Province. The contract is worth K60.0m and is funded by the Asian
Development Bank and PNG Government

• Managing Director (MD) and Chief Executive for OK Tedi Mining (OTML) Mr
Peter Graham said during the APEC First Senior Officials Meeting that the
company is anticipated to announce a profit of K850.0m for the 2017 financial
year. He added that OTML has become a competitive producer and is
generating sufficient cash to finance growth opportunities

• Bank South Pacific (BSP) has recorded a consolidated operating profit after
tax of K757.0m profit for 2017 a 17.7% an increase from 2016. BSP Group’s
Chairman, Sir Kostas Constantinou said while global growth has
strengthened during 2017, business conditions were somewhat challenging
given the modest growth in the countries BSP operates in. He said despite
these macroeconomic challenges BSP Group recorded positive profits

• Kina Securities (KSL) has reported a statutory profit of K23.0m and an
underlying profit of K30.0m for 2017. This is a 44.0% and 27.0% drop
respectively from the same period in 2016. KSL said the results are in line
with mid-year analysts’ expectation and Kina’s market update. KSL also
announced a final dividend of A$0.04 per share ex-trade Thursday 01st
March and payable Thursday 5th April

• According to a media release by City Pharmacy Group (CPL), Mr Mahesh
Patel has stepped down as Chairman of the Group and attained the role of
MD effective 1st March. As at that date, the current MD Mr Joe Barberis has
has retired as a director of the CPL Group. Further Mr John Dunlop has been
appointed as the Chariman pending role confirmation during the year.

• This week’s BPNG auction result in Central Bank Bills offered for 28 days
only was over-subscribed by K53.70m out of the total amount of K437.50m
on offered. This indicates that there is an increase in appetite for shorter
dated securities. The weighted average yield for 28 days remained
unchanged at 1.40% from the previous auction week

• This week’s BPNG auction results in Treasury Bills were over-subscribed by
K6.6m out of a total amount of K258.91m on offer. This indicates that there
is in increase in appetite for longer dated securities. Weighted average yields
for 182 days, 273 days and 364 days remained unchanged at 4.72%, 6.76%
and 8.04% respectively from the prior week

• KSi Index remained unchanged from the previous week at close at 5,585.08
and KSi Home Index increased by 0.5% to close at 10,900.86. These was
mainly underpinned by the increase in share price of BSP.

International Market Summary:

• US President, Donald Trump announced that there will be heavy tariffs on
imported steel and aluminium products in order to protect US producers. He
said that duties of around 25% and 10% on steel and aluminium respectively
will be confirmed by next week. The recommendation to impose tariffs was
captured in a report by the Secretary of Commerce, Wilbur Ross after
President Trump asked him to investigate if National Security was under
threat of impairment by steel imports.

• Markets are concerned about reaction of major exporters to the US including
Canada, Japan, South Korea and China who will be hit with higher costs if
this announcement comes into effect.

• Asia stock markets dropped over the week sparked by concerns around US
President’s intention to impose high tariffs on steel and aluminium imports to
the US. The Nikkei index was down 3.2%, Hang Seng index was down 2.2%
and Shanghai Composite was down 0.9% for the week.

• Eurozone shares were also affected by news of hefty steel import tariffs. The
FTSE index was down 0.9%, the German DAX was down 2.3% and the CAC
40 index was down 1.0% for the week.

Click the link below to view the full report in PDF.

pdfKFM Weekly Investment Update: Friday, 23 of February 2018

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