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KFM Weekly Investment Update: Friday, 06 October 2017

Local Market Summary

•The PNG Government plans to inject US$100.0m (K310.0m) into foreign exchange (FX) market to ease the shortage problem. The intervention in the market will be in 2 phases. The first release of US$46.0m to be effected immediately for several small import orders. The remaining US$54.0m will be effected for a few large imports in the first week of October

•The National Government presented K900,000 to BSP to off-set development and roll out of the small and medium enterprise lending software system called LendFast. The software system is a product of cooperation between the Government, BSP and the World Bank through the International finance corporation. Minister for Commerce and Industry, Wera Mori, presented the cheque to BSP CEO Robin Fleming

•World Bank said Papua New Guinea’s fiscal stress and limited FX inflows is expected to continue given the expected low commodity price in 2017 and 2018. According to the bank’s October 2017 edition of the East Asia and Pacific Economic Update. The lower commodity prices, runs the risk of further moderating growth while the foreign exchange shortage would continue to dampen necessary imports

•According to the Mineral Resources Authority (MRA), production forecast indicated that Lihir may produce around 950,000 ounces, closing on its 1 million ounce production target in the calendar year. MRA says this would be an impressive turnaround and achievement, emphasising Lihir credentials as a world top 5 gold mine aspirant by production and consistently rated as 3rd globally for its ore reserves

•Kumul Petroleum Holdings Limited (KPHL) will decide whether to take up a stake in the Pasca A field project after an assessment of the project, MD Wapu Sonk said The K938.0m project will be developed by Twinza Oil Ltd about 90km off the Gulf coast. KPHL will do an assessment of the project economics which includes reserves estimation, development concept, financing and marketing before we exercise our right in the Pasca Project for the usual 22.5% as mandated by law, Sonk said.

•Property prices are inflated because of the limited land available for development, according to the Real Estate Industry Association president Mike Quinn. Mr Quinn urged the Government to develop policies which would access more land for the real estate market. He said land availability is one very significant factor that continues to exert upward pressure on property prices

•This week’s BPNG auctions in Central Bank Bills were offered for 28 days and 63 days with an under-subscription of K70.5m out of total amount of K552.5m on offer. The weighted average yield for 28 days remained unchanged at 1.37% from the previous week while 63 days was 2.35%

•This week’s BPNG auctions in Treasury Bills were under-subscribed by K84.9m out of a total amount of K227.4m on offer. Weighted average yields for 182 days and 273 days remained unchanged from previous week at 4.73% and 6.73% respectively and for 364 days increased by 0.01% to 8.01%

•The KSi Index ended the week with a gain of 0.7% to close at 5,256.76 lifted by the rise in share price of Oil Search which ended at K17.55. The KSi Home Index declined by 1.8% to close at 10,938.19 points


International

•US stock-market indexes posted solid gains and closed at all-time highs after Congress passed a budget resolution, a step seen as setting the stage for an overhaul of the tax code

•UK stocks marched higher, a day after narrowly breaking a five-session winning run, as miners advanced on the back of a rally for major metals and the pound slid to a four-week low against the dollar. The FTSE 100 index rose 0.5% to close at 7,507.99

•Japan’s Nikkei share average topped a new two-year high on Friday and recorded its fourth straight weekly gain, supported by the impact of a weaker currency as well as US stock gains. The Nikkei ended the week at 20,690.71 points, up 1.6% from the previous week’s close

•ASX 200 rose by 0.50% to 5,710.68 on Friday from 5,652.00 in the previous trading session. Historically, the Australia S&P/ASX 200 Stock Market Index reached an all-time high of 6,828.70 in November of 2007 and a record low of 1,358.50 in November of 1992

•Australian bank stocks rose more than 1.00%. Meanwhile, Japan’s Topix bank subindex was up 1.30%. The US rate outlook is important for Asian financial companies as their margins have been under pressure in the current low-rate environment

•PGK/USD remained unchanged for the week to close at 0.3125 while PGK/AUD appreciated by 1.0% to end at 0.4027

•The US dollar strengthened over the week, boosted by stronger-than-expected report on unemployment in the US. The AUD/USD was down 1.0% to 0.7762 while EUR/USD declined 0.6% to 1.1698. Meanwhile, GBP/USD dropped by 2.4% to 1.3084 due to speculation about possibly early elections as uncertainty about the current British Prime Minister continues

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

pdfKFM Weekly Investment Update: Friday, 06 October 2017

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