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KFM Weekly Investment Update: Friday, 22 December 2017

Local Market Summary:

• According to the Transport and Infrastructure Minister Hon. Westley Nukundj, the government for the first time provided more funding to develop maritime transport infrastructure in the country. Hon Westley said the funding to the transport sector in the 2018 budget is K937.1m up 2.1% more than the 2017 supplementary budget. Meanwhile, the government allocated K40.0m for feasibility studies and design for four international sea ports in Vanimo, Wewak, Manus and Kikori that would facilitate both international and domestic shipping

• The department of agriculture to have access into K100.0m state equity investment funds in the National Development Bank. This was revealed by the Minister for Agriculture and Livestock Hon. Benny Allan. Hon. Allan said that the funds would go towards various agriculture projects proposed by private company which the national government would partner to build the sector in 2018. Hon. Allan further said that PNG government would have partnership with India to develop the agriculture sector

• The 15.7% increase in fuel excise next year would have a direct cumulative effect on inflation in the country. This was revealed by the Commissioner of Independent Consumer and Competition Commission Mr Paulus Ain. Mr Ain said consumers will pay more from January 1, 2018 at the rate of K0.23 per litre from K0.10 for diesel as government taxes on diesel would account for 17.8% of the final retail price which is an increase from 13.1% in 2017

• The ANZ bank launched its new security feature on its internet banking platform. According to ANZ PNG’s CEO Mr Mark Baker, ANZ continues to improve on its products and services to ensure ANZ PNG is aligned with ANZ’s global security standards.

• PNG Air has faced another financial challenging year with a K34.8m operational loss before abnormal items and tax. This was announced by the Board chairman Mr Murray Woo at the Annual General Meeting held in Port Moresby. The loss was due to general softening of the PNG economy, global downturn in the resources sector and charter operations expiry of existing contracts and lack of new charter opportunity. Meanwhile, the airline is expecting a better year to bring back profitability in 2018

• The City Pharmacy (CPL) Chairman Mahesh Patel announced the Rights Issue via Port Moresby Stock Exchange that CPL’s ordinary shares would be offered at K0.60 per new share to raise gross proceeds of approximately K43.0m. The objective of the Rights Issue is to provide additional liquidity to the business and would be used by CPL to reduce existing creditor balances

• This week’s BPNG auction results in Central Bank Bills offered for 28 days only were over-subscribed by K55.0m out of the total amount of K347.5m offered, indicating an increase 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 under-subscribed by K79.3m out of a total amount of K229.1m 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 decreased by 2.9% to end at 5,466.85 points underpinned by decrease in share price NCM by 0.5% while the KSi Home Index remained unchanged to end at 10,9117.37 points

International Market Summary:

• The markets moved as the regional Catalan election progressed with preliminary results indicating majority voting for independence. This would be a blow to Spain’s government which was hoping that the campaign for independence would eventually die out. The impact of the Catalan vote on the market is expected to be limited

• The Euro dropped when preliminary results on the Catalan election were released but European stocks managed to close on positive ground as investors look to wind down positions ahead of the festive period holidays.

• US stocks were buoyed by the strong economic data and the tax reform. Banks and energy stocks led the US market gains.

• Asian stocks edged up on US data indicating stable economic growth. The Nikkei index was up 0.8%, Shanghai index was up 0.2% and the Sensex index was up 1.5% for the week

• Oil prices fell under pressure in response to an outlook for increase in supply driven by US output as well as anticipation of the re-opening of the Forties pipeline in January 2018.

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

pdfKFM Weekly Investment Update: Friday, 22nd of December 2017

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