KFM Weekly Investment Update: Friday, 05 January 2018

Local Market Summary:

• Independent Consumer and Competition Commission (ICCC), CEO Mr Paul Ain has confirmed that 2018 will see increases in almost all goods and services. This is mainly due to the new tax for fuel prices as per the 2018 budget set out by the government. The increase in excise duty for diesel from 10 toea to 23 toea per litre will increase the final retail prices approximately by 5.7%

• The PNG Government will end the practice of discounting fishing fees to vessels listed as associated with PNG onshore processors which will save the country K235.0m. The National Executive Council has instructed the National Fishing Authority (NFA) and its board to implement these changes. In the last decade the subsidy has grown to more than US$100.0m (K330.0m) each year. The government projects the new rebate system will save US$70.0m (K235.0m) in revenue in 2018

• Moreover, the PNG Fishing Industries Association (FIA) has maintained its position that the rebate scheme will not attract new foreign fishing companies to invest in onshore processing in PNG, said FIA president Mr Sylvester Pokajam. This comes after PM Hon. Peter O’Neil stated that there will be no more discounted fishing licenses offered in the country’s archipelagic waters, but rather rewards to PNG based processors who meet state agreements and process in PNG

• Kina Petroleum (KPL) has raised around K13.0m after issuing a total of 75 million shares at the end of 2017. KPL is a registered company established in 2009 to apply for and acquire oil and gas exploration and production concessions in PNG. It announced that the shares were issued for cash consideration of $A0.07178 (17 toea) per share with total funds received of $A5.4m (K12.8m). KPL is in a joint Venture Partnership with Horizon Oil (Papua) , Talisman Energy Niugini

• Kina Securities (KSL) formally announced that Mr Syd Yates, MD of the Kina Group of Companies retired on 2nd January 2018 which is in line with the previous announcement in 22nd June 2017. KSL’s Chairman Mr Isikeli Taureka thanked Mr Yates for his long and distinguished service of over 20 years to the organisation and contribution to the country’s financial sector. Westpac’s former Regional Head of South Asia and Pacific Mr Greg Pawson replaces Mr Yates

• This week’s BPNG auction results in Central Bank Bills were offered for 28 days only and was under-subscribed by K9.0m out of the total amount of K426.5m offered, indicating a decrease in appetite for shorter dated securities. The weighted average yield for 28 days remained unchanged at 1.41% from the previous week

• This week’s BPNG auction results in Treasury Bills were over-subscribed by K16.0m out of a total amount of K237.5m on offer. Weighted average yields for 182 days, 273 days and 364 days remained unchanged at 4.73%, 6.76% and 8.03% respectively from the previous week

• The KSi Index and KSi Home Index both remained unchanged from the previous week to end at 5,467.04 points and 10,890.72 points respectively

International Market Summary:

• The US employment report released this week showed higher increase in employment than economist expectations for the private sector. This has boosted expectations for the US payroll data to be released soon. Despite signs of strong labour, the US dollar was weak against major currencies which could be due to current low bond yields

• Improvement in US jobs data indicate growing confidence in the US economy which provided a boost for US stocks. NASDAQ index was up 2.5% to end at 7,077.92 points, Dow Jones index was up 1.4% to end at 25,075.13 points and S&P 500 index was up 1.9% to end at 2,723.99 for the week

• In Australia, the S&P/ASX 200 and S&P/ASX 50 were both up 0.9% to end at 6,122.35 points and 5,976.30 points respectively for the week

• Asian shares also rallied for the week, boosted by US data and stock performance. The Nikkei was up 4.2%, Hang Seng index was up 2.7% and the Shanghai Composite was up 2.8%

• The AUD/USD was up 0.5% to 0.7846 while EUR/USD and GBP/USD appreciated 0.1% to 1.2074. and 0.8% to 1.3575 respectively

• PGK/USD remained unchanged for the week to close at 0.3095 while PGK/AUD depreciated by 0.6% to end at 0.3945. This was driven mainly by the cross-currency effect of the USD weakening against major currencies

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pdfKFM Weekly Investment Update: Friday, 05th of January 2018

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