KFM Weekly Investment Update: Friday, 03 August 2018

Local Market Summary:

● Prime Minister Hon. Peter O’Neil will lead a delegation of business experts to Brisbane for the annual Papua New Guinea Investment Conference. Keynote speaker Professor Tim Flannery will be presenting on how PNG can invest into a range of business opportunities across energy, biotech, agriculture, marine produce, construction and other sectors. Participants will also receive economic updates from Asian Development Bank’s (ADB) Country Director Mr David Hill and Economist Mr Edward Faber. Other presenters in the conference include Ms Carolyn Blacklock from PNG Power, and Works Secretary Mr David Wereh

● The State has paid K15.0m to Nambawan Super (NSL) as part payment of the K2.0bn portion on the unfunded component for its employee’s contribution. According to NSL’s Chairman Mr Anthony Smare, the State has paid over K260.0m towards the public servants portion that was unpaid for from 1991 to 2008. Mr Smare stated this was a positive step for the State towards its obligation to public servants despite tough economic times

● In a media conference held this week, the Independent Consumer and Competition Commission (ICCC) informed the business community and other
major stakeholders that the current voluntary pre-merger notification provisions under Section 81 and 82 of the ICCC Act 2002 were amended to be mandatory. ICCC’s Commissioner Mr Paulus Ain said the amendments would now give ICCC greater regulatory control of potentially anti-competitive business mergers and acquisition in the country

● Furthermore, Mr Ain said there are two main thresholds for notification. First, if the value of the proposed transition is K50.0m or more and second, the market share of the acquirer is likely to be 50.0% or more after the acquisition. Hence if a proposed business falls within either of these thresholds, they are required by law to give notice to ICCC by applying for a Clearance or Authorisation

● Policy talk on digital economy can achieve positive outcome, says PNG APEC Business Advisory Council (ABAC) member Mr Wayne Golding during a Digital Innovation Forum hosted by Abc PNG and Taiwan last month. This can only occur if a relevant infrastructure is in place in order to enable Papua New Guineans to be more involved in digitisation. Mr Golding said that with PNG’s developing economy there are no legacies of other economies or carryovers from old technology to hinder progress thus we can do a quantum leap forward on technology

● Harmony Gold Mining has announced that its Hidden Valley operations in Morobe Province reached commercial levels of production in June 2018. CEO Mr Peter Steenkamp is confident the project will produce more than 180,000 ounces in its fiscal year of 2019. Moreover, the mine expends on average K450.0m annually on goods and services in the country

● Oil Search (OSH) advises that its Agogo Production Facility (APF) has resumed operations, following the completion of repair work necessary to bring the facility back online post the PNG Highlands earthquake in February 2018. With the restart of the APF, all OSH-operated facilities are now online. Oil production commenced at an initial rate of approximately 2,000 barrels of oil per day (gross) and a progressive ramp-up in production is anticipated through to early 2019

● This week’s BPNG auctions in Central Bank Bills were over-subscribed by K50.0m out of the total amount offered K560.5m. The weighted average yield for 28 days remain unchanged at 1.40% from the previous week

● This week’s BPNG auctions in Treasury Bills were over-subscribed by K5.15m out of the total amount offered K148.370m. The weighted average yields for 182 days, 273 days and 364 days all remain unchanged from the previous week at 4.73%, 6.76% and 8.04% respectively. 91 days drop by 0.01% to end at 2.39% from the previous week

● The KSi Index increased by 0.8% to end at 5,314.77 mainly attributed to the rise in share price of OSH (2.0%) while the KSi Home Index decreased by 0.6% to 11,222.72 underpinned by the drop in share prices of CCP (3.5%) and BSP (0.3%)

International Market Summary:

● US shares traded wins and losses across the week in a news flow heavy week as it remains on course for an expected rate hike in September and
deepening trade spats with China offsetting strong gains in tech stocks as investors cheer Apple surpassing the one trillion dollar value mark and huge
gains in Tesla overnight, triggering a squeeze on the US markets most shorted stock

● The DJIA closed lower by 0.5% at 25,326.16 while the S&P500 closed higher by 0.3% to end at 2,827.22 points

● Asian markets fell significantly lower, as major losses in China on the back of trade concerns weighed on the region. The Nikkei, Hang Seng and Shanghai all plummeted by 0.9%, 3.8% and 3.7% at 22,512.53, 27,714.56 and 2,768.02 points respectively

● The Australian share market has closed slightly lower, dragged down by losses for the banks and the materials sector. S&P/ASX200 and S&P50 both closed lower by 0.9% and 0.8% to end at 6,240.86 and 6,099.90 points respectively

KFM Weekly Investment Update: Friday, 03 of August 2018

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