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KFM Weekly Investment Update: Friday, 04 May 2018

Local Market Summary:

● Papua New Guinea (PNG) is knee to attract and encourage New Zealand (NZ)
Foreign Direct Investment in PNG especially in the areas of agriculture, tourism
and biosecurity. Minister for National Planning and Monitoring Richard Maru lead
delegation to NZ said these areas NZ has a comparative advantage over and we
can enhance business relations with NZ.

● The 34th Australian Papua New Guinea Business Forum and trade expo is
underway with the year’s theme “APEC 2018 – Achievement and Opportunities”.
Discussion is centred on education, energy and telecommunication infrastructure,
building small to medium enterprise sector in PNG and recovery efforts following
recent earthquake.

● PNG exports to Australia totals about A$4 billion but PNG only receives just over
half that value in terms of imports from Australia. While 4,600 Aussie companies
invested an estimated A$18 billion in PNG, said Minister for Trade and Foreign
Affairs Rimbink Pato at the Australia PNG Business Forum in Australia. Those
investments, trade and business ties have their long history of friendship between
the two countries, supported by family, church, sporting, academic and business
links.

● The CEO for Credit Corporation Peter Aitsi announced the appointment of Andy
Roberts as general manager for Credit Corporation Finance PNG. Mr Roberts has
been with Credit Corporation for five months after been recruited as business
development manager. Two key management positions will be advertised over the
coming weeks. Credit Corporation is recruiting for a general manager properties
and a head of credit to bring increased capabilities and focus to these key areas

● Exxon Mobil resumed normal LNG production rates after restarting the Hides gas
conditioning plant following the shut down or operation due to the earthquake that
hit in February. The company expects to reach full capacity this month.

● Kina Securities (KSL) stated that its fund administration division would expand its
implementation of IRESS’ Acurity Online and would be available to more than
700,000 members. According to general manager of Kina’s wealth management,
Adam Fenech. The expansion is likely to raise the benchmark for PNG members
and the wider Pacific market through improving services across the board. The
new portal and mobile app would provide PNG superannuation members with
access to their fund information online. Member would also be able to update their
details, access their balance and transaction history and view their statements
from any device.

● In addition, KSL announced the Amended Renewal of Fu Shan Escrow period
relating to 32,758,650 ordinary shares in the Company held by Fu Shan
Investment (Escrowed Shares) until 1 July 2018 to accommodate the regulatory
requirements of Bank of Papua New Guinea (BPNG).The extension is required to
provide additional time to complete formalities of divestment of the shares held in
escrow

● The Chairman of the Bank South Pacific (BSP) Group, Sir Kostas G. Constantinou
OBE announced that Standard & Poors (S&P) has issued its 2018 revised ratings
assessment of BSP on 30 April which lowered BSP’s credit rating from ‘B+’ longterm
and ‘B’ short term ratings outlook on the Bank to ‘B’. At the same time, S&P’s
long-term issuer credit rating outlook for BSP is ‘stable’. The movement in BSP’s
rating follows a similar revision of Papua New Guinea’s sovereign rating which was
announced recently.

● This week’s BPNG overall auction results in Central Bank Bills were undersubscribed
by K58.50m of the total amount offered K392.40m. The weighted
average yield was unchanged for the 28 days term at 1.40%

● This week’s BPNG overall auction results in Treasury Bills were over-subscribed
by K19.32m of the total amount offered K120.30m. The weighted average yields
remained unchanged for 182 days, 273 days and 364 days were 4.72%, 6.76%
and 8.04% respectively

● KSi Index decreased by 0.4% to close at 5,155.90 points due to drop in share
prices of OSH by 1.1% while The KSi Home Index increased by 0.1% to close at
11,056.88 due to rise in share price BSP by 0.1%

International Market Summary:

● US stocks closed lower as lower earnings reports offset strong economic data
received in the week prior. Dow Jones Industrial was down 1.6%, S&P 500 was
down 1.5% and the NASDAQ index was down 0.4% for the week.

● Asia stocks saw a week of weak trading as markets wait on the US jobs data due
this week. Nikkei was down 2 basis points, the Shanghai Composite was up 0.3%
and the Hang Seng was down 0.7% for the week.

● Global bond yields for 10-year bonds were down for the week on low inflation data
out of Europe. The 10-year bond yield for UK and Australia were both down 5 basis
points, France was down 3 basis points and Japan dropped 1 basis point over the
week.

● The US dollar strengthened and the cross effect meant PGK was up 1 basis point
against the AUD.

pdf KFM Weekly Investment Update: Friday, 04 of May 2018

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