KFM Weekly Investment Update: Friday, 03 March 2017

Local Market Summary

• Prime Minister Peter O’Neil informed investors during the Inaugural Petroleum and Energy Summit that their investments are safe and will generate profits. He said the economy is performing well with positive GDP growth despite challenges in commodity prices

• Japan committed to be the large buyer for LNG for the foreseeable future. This was revealed during the Petroleum and Energy Summit by Yuki Sadamitsu from Japanese Ministry of Economy, Trade and Industry. He stated that Japanese government and companies wanted to cooperate, share know-how and expand Asia Pacific LNG market with Asian countries

• Hiroki Sato, the Chief Fuel Transaction Officer of LNG buyer JERA Co.Inc stated that PNG holds 5.0% in its total LNG imports. He said the contract volume between the firm and PNG is 1.8 m tonnes per annum and trade were stable since 2014. He reiterated that PNG is an important supplier for the firm and will continue to maintain interest with the country

• A joint venture agreement has been signed between Kumul Petroleum Holdings Ltd (KPHL) and LNG Japan to market Liquefied Natural Gas to LNG markets. KPHL MD Wapu Sonk stated that LNG Japan has experience in this and the partnership will be of great benefit. LNG Japan CEO Norikazu Onishi also said that the firm is happy to contribute to PNG’s Oil and gas industry and other areas

• ExxonMobil MD Andrew Barry announced to the participants in the Petroleum and Energy Summit that the firm completed acquisition of InterOil as per transaction approval by Yukon Supreme Court of Canada. He stated that the takeover will increase its economic activity in the country

• Nambawan Super Limited (NSL) declared K404.0m in profit from 2016 and announced a 9.0% crediting rate payable to all members. This was announced by NSL Board Chairman Anthony Smare. He said NSL made a total profit of K1.4b and credited members an average of 8.2% over the last four years. He also added that net assets have grown from K3.7b in 2012 to K5.8b in current

• The diverse investment portfolio of NASFUND in recent years culminated strong profit growth and healthy credit rating for the members. This was revealed by NASUND’s CIO David Brown. He said sound investment decisions made by NASFUND Board over recent years created a quality portfolio in real estate, government securities and offshore investment which are creating great benefits for its members

• Air Niugini will begin its Port Moresby to Townsville flights at this month’s end. CEO Simon Foo said the new service will create links for important businesses and added that Townsville citizens will benefit by using the flight as a transit to other major Asian countries

• Bank South Pacific Group (BSP) announced a net profit of K643.5m for the financial year 2016. Total assets of BSP increased by 14.5% or approximately K2.6b to K20.8b driven by strong growth in the loan book across all countries. Loan book growth amounted to K1.5m from increased corporate lending and the acquisition of former Westpac Vanuatu. The currency translation effect on the movement of Kina has also had a positive effect on the level of total assets

• Kina Asset Management (KAM) recorded an investment gain of 14.7% for the year ending 31st December 2016 creating a total value of K7.0m. The result was driven by strong gains across the domestic and international portfolio, the latter benefitting from Kina’s depreciation against Australian dollar over the year. KAML Chairman Sir Rabbie Namaliu said that in local currency terms gains were achieved across a number of areas of the KAML investment portfolio. The Fund recorded a valuation gain of K3.8m attributed to the strong performance of BSP and dividend and interest income in which dividends totalled K3.1 m

• This week’s BPNG auctions in Central Bank Bills were offered for 28 days only with an over-subscription of K23.6m out of a total of K618.0m on offer. The weighted average yield was 1.19%

• This week’s BPNG auctions in Treasury Bills were under-subscribed by K24.54m out of the K223.85m on offer. Weighted average yields were 2.54% for 91 days, 4.72% for 182 days and 7.79% for 364 days

• The Kina Securities Index was up 4.7% to close at 5,051.05 points, while the Kina Securities Home Index remained unchanged at 10,694.78 points

International Market Summary

• The Dow Jones shed more than 100 points to finish barely above 21,000 as weak financial shares dragged on the market. DJIA fell 112.58 points, or 0.50%, to close at 21,002.97.The dollar slipped on Friday but remained on track for a solid weekly gain on growing expectations that the US Federal Reserve will raise interest rates at its mid-March meeting, which led to a rise in US Treasury yields

• European shares paused for breath on the day after strong rally in the previous session, though there were sharp gains from Britain’s Melrose and Norway’s Subsea after wellreceived results. The pan-European STOXX 600 index ended flat, weighed down by falls among basic resources and banking stocks

• Asian stock indexes tracked strong gains in the US and Europe with a renewed sense of global optimism, after an initially cool reaction to Trump’s speech on Wednesday

• The ASX jumped after Wall Street hit new records overnight following US President Donald Trump’s speech to Congress as well as solid global manufacturing data. The benchmark S&P/ASX200 rose 1.3% to 5776.6 points

• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD appreciated by 2.1% to end at 0.4170, while AUD/USD depreciated by 2.1% to end the week at 0.7555

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