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KFM Weekly Investment Update: Friday, 06 June 2014

Local Market Summary

• Effective this week, Authorised Foreign Exchange Dealers in PNG were instructed by BPNG to buy and sell USD against Kina between 0.4055 and 0.4205 (i.e: 0.4130 +/- 75 points – a total of 150 basis points).

• The Bank of PNG Kina Facility Rate (KFR) will be maintained at 6.25% for the 6th consecutive month this year as announced early this week.

• The CPI headline index shows an annual change of 3.8% over 12 months from Q3’2013 to Q3’2014. CPI is 2.0% for the March quarter 2014, compared to 0.1% in December quarter of 2013.

• The commencement of production and sales from the PNG LNG Project has progressed well and OSH was pleased to report that another major milestone was reached, with the arrival of the first LNG cargo to Japan. OSH now expects 2014 production to be in the range of 17 – 20 million barrels of oil equivalent (mmboe) compared to the previous 14.5 – 17.5 mmboe guidance range.

• The Air Nuigini Board has approved a 10% staff reduction, representing 250 jobs to be lost. This is attributed mainly to the completion of the LNG Construction phase and the slow-down in the economy.

• Bemobile has commenced upgrading its network coverage in all centres of PNG and intends to offer competitive rates to sign up more users, CEO Sundar Ramamurthy said. They are working with two Commercial Banks to finance this project.

• This weeks BPNG auctions in Central Bank Bills (CBills) and Treasury Bills (TBills) were over subscribed and under subscribed respectively. The weighted average yields for 182 and 364 days were slightly higher from the previous week, 3.90% and 6.16% respectively.

• Over the week, PGK/AUD and PGK/USD exchange rate finish the week up 17% to 0.4424 and 0.4129 respectively. (see graph for PGK/USD in the PDF attachment below)

• The KSi Index closed the week marginally lower by 0.3% to 3,694.01 similarly the KSi Home Index closed the week lower by 1.5% to 7,964.47.

International Market Summary

• European shares rose on Thursday after the European Central Bank cut rates as expected and vowed further stimulus measures if they were needed. The FTSEurofirst 300 index rose by 0.4% with the German Dax up by 0.2%. But the UK FTSE went against the trend, falling by 0.1%.

• Asian markets have closed the week mixed in response to the European Central Bank’s move to introduce negative deposit rates. Asian Investors refrained from any major moves in anticipation of the recovery in the U.S economy.

• According to Australian Bureau of Statistics, Australia’s economy grew 3.5% on-year in the first quarter( its fastest pace in nearly two years).

• BHP Billiton expanded iron ore production, despite market facing overcapacity, at the back of renewed demand from China and elsewhere.

• On commodity, Gold was up 0.6% to U$1,253.50 while both Brent and Light Crude fell 0.6% to U$108.79 and 0.3% to U$102.45 respectively.

Click on the link below to view full report in PDF.

pdfKFM Weekly Investment Update: Friday, 06 June 2014

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