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KFM Weekly Investment Update: Friday, 08 February 2019

  • According to Hon. Prime Minister (PM) Peter O’Neill, the Asia Pacific Economic
    Corporation (APEC) Summit recently hosted by PNG will have positive impacts
    for the country in the long term. Since APEC, new investors and companies are
    now doing their research and sending teams to visit the country. PM O’Neill
    added that independent observers have done their analysis and predicted that
    PNG could expect billions of kina in investments. The government is in the initial
    stages of the electrification partnership worth US$1.6b with Australia, Japan,
    New Zealand and United States planned to begin in the first quarter of this year.
  • Consequently, the Mayur Resources, a developing industrial relations, copper
    gold and power generation platform in PNG recently submitted a Power
    Purchase Agreement (PPA) proposal to PNG Power Ltd (PPL). PPL confirmed
    receiving the proposal, however PPL was uncertain whether the proposal
    showed a commitment that would last 25 years. PPL Acting Managing Director
    Ms Carolyn Blacklock stated that it was looking more towards hydro and solar,
    thus coal power wouldn’t be a part of PPL’s plan.
  • Subsequent to the amendments passed in July 2018 to control mergers and
    acquisition mandatory notices, the Independent Consumer and Competition
    Commission (ICCC) indicated positive responses from the business
    community. The amendments made certain that any business pursuing to
    acquire another business were to submit an application to ICCC for
    authorization under sections 81 and 82 of the ICCC Act. Thus, resulting in a
    rising demand for ICCC’s processing on the part of the competitive markets and
    fair trade division.
  • Nambawan Super Limited (NSL) Chairman Anthony Smare acknowledged
    receiving the complete K146.0m unfunded state share, which was committed
    for retired public servants per the 2018 Supplementary Budget. Mr Smare said
    the payments received will enable benefits to be allocated to former public
    servants who exited employment up until September 2018. Additionally, the
    2019 Budget committed a further K150.0m payable this year which NSL will
    continue to engage dialogue with the Deputy PM and Treasurer Hon. Charles
    Abel on this.
  •  Westpac Banking Corporation Limited (WBC) announced the new appointment
    of Mr Elliott Griffin as Head of Corporate and Commercial banking. Mr Griffin is
    an experienced corporate banker and leader who has been with the WBC
    Group since 2009. He held senior roles with WBC in Australia, Solomon Islands,
    Vanuatu and recently Fiji. His role starts effective this week.
  • Pursuant to the publication in 2nd January 2019, Cobalt 27 Capital Corp (Cobalt
    27) entered into a Scheme Implementation Agreement (SIA) with Highlands
    Pacific Limited (HIG) to acquire all its shares, Cobalt 27 is currently in
    discussions with PanAust for a buy back arrangement. Both parties are in
    agreement that if the proposed Scheme of Arrangement proceeds and is
    fulfilled, Cobalt 27 will attain HIG shares currently held by PanAust. This will be
    in return for HIG transferring its 20% interest, in the Frieda River Joint Venture
    to PanAust. Thus, making PanAust a 100% shareholder in the US$6.0b Freida
    project.
  • The Board of PNG Air Limited announced the resignation of Mr Simon David
    Woolcott as a Director of the company effective 2 February 2019. Mr Woolcott’s
    resignation was due future commitments.
  • This week’s BPNG auction in Central Bank Bills were under-subscribed by
    K18.00m out of the total amount offered K382.50m. This indicated that there
    was a decrease in appetite for shorter dated securities. The weighted average
    yield for 28 days remained unchanged at 1.39% from last week. There were no
    bids for 63, 91 and 182 days.
  •  This week’s BPNG auction in Treasury Bills were over-subscribed by K166.15m
    out of the total amount offered K221.57m. This indicated that there was an
    increase in appetite for longer dated securities. The weighted average yield for
    182 days remained unchanged at 4.68%, while the 273 and 364 days
    decreased by 0.20 points and 0.32 points to 6.11% and 6.84% respectively from
    the previous week. There were no bids for 63, and 91 days.
  • Kina Securities Index was down 0.1% to 5,171 and Kina Securities Home Index
    closed higher by 0.2% at 11,482 points respectively. This was mainly attributed
    to drop in BSP and OSH price by 0.1% and 0.3% to K10.30 and K17.95 and
    rise in share prices of CCP and KSL to close by 3.7% and 1.5% to close at
    K1.40 and K2.70 respectively.

International

  • US stocks surged mid-week followed by a slight decline as investors feared that
    the Trump administration would not reach a deal with China before the March
    deadline. Dow Jones and NASDAQ index closed higher by 0.4% and 0.3% at
    25,169 and 7,288 points respectively while the S&P 500 dropped by 2 bps to
    end at 2,706 points.
  • Australian stocks rallied to the highest since September 2018 with major banks
    bouncing back after the Haynes report was released. Both the S&P 200 and
    S&P 50 were up by 3.6% and 3.9% at 6,071 and 5,990 points respectively
  •  UK stocks began to falter as the Bank of England projected the weakest
    economic outlook for UK since 2009 however for the week, the FTSE 100 was
    stable by positive 1.0% at 7,093 points.
  • Asian stocks lost ground on renewed anxiety over trade and global economic
    slowdown, with sentiment not helped by the absence of any positive signs for
    a resolution in the US-China trade row. Nikkei 225 index was the most
    affected having declined by 2.2% to 20,333 points
  • Oil prices began to come under pressure due to renewed worries of a global
    economic slowdown and reports that Libya to increase production. Both Light
    and Brent Crude dropped by 5.4% and 2.4% to US$52.27 and US$61.25 per
    barrel respectively.

pdf KFM Weekly Investment Update: Friday, 08 of February 2019

 

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