KFM Weekly Investment Update: Friday, 06 March 2015

Local Market Summary

• French based global energy giant, Total has been appointed as the operator of the Gulf LNG Project (PRL15). According to a statement released by InterOil, the appointment will take effect in accordance with an operator transition plan and the terms of the JV agreement and is subject to all necessary PNG Government approvals.

• National Petroleum Company of PNG Managing Director, Mr Wapu Sonk reported that the state received US$418m (K1.15b equivalent) as its distribution from the PNG LNG project revenue. Mr Sonk added that the net distribution was less the advances made prior to the financial close for the purchase of Oil Search shares in late December, Cue Energy purchase and dividend paid to the state in early January.

• BSP announced a consolidated operating profit after tax of K507.3m for the year ending 2014, an increase of 16.1% on the consolidated operating profit after tax of K436.8m in 2013. BSP Board Chairman Mr Kostas Constantine stated that despite the slowdown in economy, the bank achieved solid results.

• Sime Darby officially announced its completion of the New Britain Palm Oil acquisition and said that its acquisition would double the company’s earning in a year. The company will pay £1.0b (K4.23b) for 98.8% of NBPOL shares adding that the offer price of £1.07b is fair despite the risks associated with the volatility of commodity prices.

• Nambawan Super Limited (NSL) declared a profit after tax of K338.0m for the year ending 2014, an average annual return of 9.7%*. Board Chairman, Mr Anthony Smare, said that even though the profit was achieved in challenging conditions, the outcome has enabled the Fund to pay a 7.0% dividend to members’ accounts for the 2014 financial year.

• Furthermore, NSL also appointed a new Chief Investment Officer, Dr Stephen Nash who brings a high level of investment skills and knowledge that will assist NSL in ensuring the best investment returns for members whilst maintaining security for members’ fund.

• The Kina Facility Rate released by BPNG will be maintained at 6.25% for the month of March 2015.

• This week’s BPNG auctions in Treasury Bills were undersubscribed by K55.3m out of the K170.0m on offer. Weighted average yields of 4.7% for 182 days and 7.4% for 364 days.

• The KSi index remained unchanged for the week to 3,651.08 while the KSi Home Index closed 0.3% however for the week at 9,770.68.

International Market Summary

• Australian share market closed lower as a result of RBA’s decision to hold its cash rate at 2.25%. Both S&P/ASX50 and S&P/ASX200 indexes ended the week lower to 0.5% or 6,066.30 and 5,898.9 respectively. Notwithstanding, the market is still hovering at seven year highs.

• US equities rose with stocks around the world, as energy producers rallied amid Brent crude oil’s move into a bull market. Treasuries fell, while the euro gained as the Greek government retreated from a call for a debt write down.

• European shares trimmed their gains this week after Market’s final February Composite Purchasing Managers’ Index came at 53.3, weaker than a preliminary estimate of 53.5. The FTSE index of top European shares ended the week up 0.2% to 6,961.1. In the prior weeks, the market enjoyed positive surprises on the macro front in Europe, which boosted investors’ expectations.

• The ECB raised growth and inflation targets and announced it would start its government bond-buying program of 60 billion euros a month on March 9. Investors were awaiting U.S. job data later in the day. Analysts polled by Reuters expect U.S. payrolls to have increased 240,000 last month and the jobless rate to have ticked down to 5.6% from 5.7%.

• Chinese stocks rose, paring its first weekly decline in a month in the Shanghai benchmark gauge, as property and financial companies advanced. The China Securities Journal said domestic banks won’t tighten loans to property companies. The Shanghai Composite Index ended the week lower to 1.9% to 3,248.48. Fiscal policy will remain proactive and monetary policy prudent, Premier Li Keqiang said during the meeting of the legislature this week, after the central bank cut interest rates for the second time in three months.

• During the National People’s Congress this week, Premier Li Keqiang announced that the Government of China has set its official growth rate target at 7.0% for the year 2015 as the economy continues to slow. The target is lower than 7.5% set last year 2014. He stated that the new target is in line with Chinas strategy to guide the economy towards slower and more sustainable growth.

• Tokyo Electric Power and Chubu Electric Power plan a joint venture to form the world’s largest liquefied natural gas importer. The joint venture will represent 16.0% of global LNG purchases, overtaking leader South Korean utility Kogas, pushing for increased contract flexibility as Japan seeks to revamp the way LNG is sold after years of soaring costs.

• Light crude oil closed the week higher by 2.6% to $51.07 from $48.91 in the last week while Brent crude closed 2.6% lower to $60.93 from $61.01 in the last week (refer to the graph in the PDF attachment below).

• PGK/USD ended the week up 0.7% to 0.3774 for the week, similarly the PGK/AUD appreciated 0.7% to 0.4838

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

pdfKFM Weekly Investment Update: Friday, 06 March 2015

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