KFM Weekly Investment Update: Friday, 03 November 2017

Local Market Summary:

• Economists presented findings in a recent forum at Canberra in Australia stating that Foreign Currency has impeded PNG imports. The economists were Professor Stephen Howes, Director Development Policy Centre, Australian National University; Nelson Nama, School of Business and Public Policy, UPNG Rohan Fox, Research Officer, Development Policy Centre, ANU and Marcel Schroder. They stated in a joint presentation that output and sales by business sector fell by 20.4% while tax revenue fell by 25.0%. Nelson Nema stated that the formal employment sector declined in 2015 and 2016 with personal income tax, company tax and GST collections dropping by K192.8m, K281.0m K124.4m respectively. Mr Nama added that there was firm evidence that all sectors of the PNG economy were in recession with GDP declining between 2015 and 2016

• ANZ chief economist Richard Yetsenga will be the headline presenter at the 2017 PNG Mining and Petroleum Conference in Port Moresby on 28th to 30th November 2017. The announcement was made by ANZ and PNG Chamber of Mines and Petroleum. Mr Yetsenga said his keynote address will be more about how PNG and its resources sector can benefit from opportunities in the global market. ANZ CEO Mark Baker said that ANZ is the supporter of the resources sector assisting customers to optimize opportunities on trade and capital flows

• According to PNG Country Manageress of World Bank Group, Patricia Veevers-Carter, a K64.0m (US$20.0m) project will be set up in Milne Bay and East New Britain provinces. She said the purpose of the funding is to upgrade and maintain all tourism sites in the two provinces that will be accessible by tourists. She added that the projects will be developed based on data collected from tourism demand assessment which the tourism authority have used to create the national and provincial strategy

• Oil Search (OSH) has signed an agreement with Link PNG (a subsidiary of Air Niugini) for a fixed wing aircraft service for both domestic and international flights. OSH MD Peter Botten said that Air Niugini has been a reliable business partner providing outstanding service since 2007. Link PNG GM Bruce Alabaster explained that under the new contract, Link PNG will provide fixed wing aviation services for OSH between Port Moresby, Moro, Kiunga and Cairns

• Meanwhile, OSH signed an agreement with a private firm Armstrong Energy LLC in Alaska North Slope to acquire oil exploration totalling K1.2b (US$400m). MD Peter Botten said the firm was embarking on to diverse its exploration activities to create a more balanced portfolio that is not exposed to only one commodity and country. He reiterated that the acquisition is in line with the firm’s vision and will not affect growth projects in PNG

• This week’s BPNG auctions in Central Bank Bills were offered for 28 days only with an under-subscription of K20.0m out of total amount of K250.0m on offer. The weighted average yield remained unchanged by 1.40% from the previous week

• This week’s BPNG auctions in Treasury Bills were under-subscribed by K48.5m out of a total amount of K108.6m on offer. Weighted average yields for 182 and 273 days remained unchanged at 4.73% and 6.76, while364 days was increased by 0.01% to 8.01% from 8.00% from the previous week

• The KSi Index increased from the previous week at 0.1% to end at 5,284.27 buoyed by the rise in share prices of OSH to end at K17.79 respectively. The KSi Home Index dropped by 0.4% to close at 10,988.42 points

International Market Summary:

• The Australian share market strengthened on Friday supported by news that Jerome Powell will replace Janet Yellen as the US central bank chief and the release of the American tax reform legislation. The S&P/ASX 200 finished at 5959.88 points, up by 1.0%

• Asian stocks rallied for the second consecutive week on the back of robust earnings prospects for companies such as Honda Motor Co and Sony Corp. The Nikkei share average finished at 22,539.12 on Thursday up 2.4% for the week

• Oil prices rose on Thursday as a result of OPEC led supply cuts which tightened the markets and curbed supplies. Brent Crude rose 2.7% to US$62.07 per barrel and Light Crude inched up by 3.2% to US$55.64 per barrel

• PGK/USD remained unchanged for the week to close at 0.3115 while PGK/AUD depreciated by 0.6% to end at 0.4053 and AUD/USD rose by 0.6% to end the week at 0.7686

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pdfKFM Weekly Investment Update: Friday, 03 of November 2017

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