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KFM Weekly Investment Update: Friday, 03 June 2016

Local Market Summary:

•PNG has successfully hosted the three-day African, Caribbean and Pacific (ACP)
Summit in Port Moresby which run on 30May to 1 June 2016. Prime Minister Peter
O’Neil closed the summit with the overall theme – repositioning of the ACP Group
to address the challenges of Sustainable Development. He also confirmed that
ACP leaders have deliberated on the three sub-themes of the summit and agreed
that the theme was timely and relevant in view of the current economic and
political threats

•Three reform policies the Government is pursuing have been described as selfprotectionist
with the potential of killing foreign investment and self-inflictive under
the current harsh economic conditions. Director of National Research Institute Dr
Charles Yala made the observations citing the SME policy, the Land Act review
and the reforms in the Department of Agriculture and Livestock

•Institute of National Affairs executive director Paul Barker said the loan
negotiations between Bank of Papua New Guinea and the International Finance
Corporation (IFC) is an unusual arrangement as the IFC is a lender to the private
sector. He said it was intended for the three main commercial banks to access
forex and, in turn, to have the capital to lend to the State through government
security, however some of the commercial banks considered themselves to have
reached ceilings on exposure and maybe preferred utilising their own corporate
sources for sustained forex, which they may be able to access at lower cost

•The United Nations Conference on Trade and Development Secretary General Dr
Mukhisa Kituyi has urged PNG to establish its permanent mission in Geneva. This
was during a bilateral meeting on the margins of the ACP Leader’s Summit in Port
Moresby with Trade, Commerce and Industry Minister Richard Maru on Tuesday.
Dr Kituyi says this matter must be of priority has PNG has missed out on many
benefits of training and capacity building as a member of UNCTAD due to its lack
of representation in Geneva. This requires permanent and consistent presence in
Geneva. Both Maru and Dr Kituyi agreed to strengthen the engagement between
UNCTAD and PNG

•Minister for Marine Resources Mao Zeming has alluded at the ACP luncheon that
PNG had undertaken significant institutional reforms which resulted in the uplifting
of the yellow card issued to tuna market. On another, note he iterated that fisheries
has experienced robust growth in Tuna attracting foreign direct investment,
increased exports to EU, increasing employment and increased revenue to the
government

•European Investment Bank, the world’s largest international public bank has
committed to lend K184.0m to fund the 27 rundown bridges in the country. This
proposed improvement in the road system aims to stimulate the agriculture sector
in the country

•ExxonMobil PNG Limited celebrated the arrival of the Kumul, the second PNG
LNG Project custom-built ship which safely completed loading its first LNG cargo
at the PNG LNG marine facilities on 1 June 2016. The Kumul is a 172,000 cubic
metre, 290-metre-long LNG carrier, providing LNG transportation to major
customers in Asia. The company also confirmed that that the 200th cargo for PNG
LNG will be loaded onto the Spirit of Hela later this weekend

•This week’s BPNG auctions in Central Banks Bills were only offered for 28day
maturity with an under-subscription of K48.0m out of a total of K300.0m on offer.
The weighted average yield was 1.1%

•Auctions in Treasury Bills were under-subscribed by K85.1m from a total offer
amount of K201.0m. Weighted average yields were 2.7% for 91 days, 4.7% for 182
days and 7.7% for 364 days

•The KSi closed 1.1% higher at 4,465.9 points on the back of a 5.0% gain in NCM
share price, and the KSHi was also up 0.5% to end at 9,345.9 points supported by
4.4% increase in share price of CCP

International Market Summary:

•US stocks inched to a seven-month closing high as crude oil prices recovered from
an early bout of weakness, although the mood across markets remained nervous
ahead of the release of US jobs figures, with the S&P 500 up by 0.3% to close at
2,105.3 points

•European stocks were little changed after ECB President Mario Draghi kept
broadly similar inflation forecasts for the euro area, while energy producers fell
after OPEC members failed to agree on a new output ceiling

•Asian markets were making modest gains as investors hunkered down ahead of
the key US non-farm payrolls report due later today and the glow of an overnight
recovery in the price of oil began to fade. Some mixed readings on services sector
activity for economies around Asia also kept things in check, as well as the
European Central Bank’s decision overnight to keep monetary policy unchanged

•The S&P/ASX 200 added 0.8% to close at 5,318.9, after yesterday falling to a onemonth
low as investors brace for a number of risk events later this month, including
a possible US rate rise and the Brexit vote

•Britain’s Prime Minister David Cameron said on Thursday that he would prefer
Britain staying on with the European Union based on the country’s present terms
but he would not recommend adopting the Euro currency

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

pdfKFM Weekly Investment Update: Friday, 03 June 2016

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