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KFM Weekly Investment Update: Friday, 08 July 2016

Local Market Summary

• Acting Governor of the Bank of Papua New Guinea, Dr Gae Kauzi announced that the decision to maintain the Kina Facility Rate at 6.25% for the month of July 2016 was based on the bank’s assessment of the macroeconomic indicators

• Papua New Guinea has been removed from the Financial Action Task Force (FATF)’s greylist, a watchlist of countries that lack sufficient anti-money laundering legislation and regulations, after two years. Bank of Papua New Guinea (BPNG)acting director for Financial Analysis Supervision Unit, Benny Popoatai said that this would ensure that PNG is a safe place to do business

• Petromin Holdings Limited officially changed its name to Kumul Minerals Holding Limited (KMHL) following the policy changes and the passing of Kumul Minerals Act by the Parliament last year. The act consolidates the states oil, gas and mining projects and the structures. KMHL will manage mining assets and oil and gas assets along with the other two sister Kumul entities

• Petroleum and Energy Minister Ben Micah announced the plans to develop the potential billion dollar shale gas at the opening of PNG’s investment portfolio into the higher rung of global gas energy producers. He further elaborated that the gas contains more than 3 trillion cubic feet which can triple the money which is generated by the existing conventional hydrocarbons in the country

• Kumul Consolidated Holdings has been tasked by the Government to look into the issues that Nautilus Minerals has run into pertaining to the Solwara-1 project. Nautilus stated it is continuing its efforts to seek alternative sources of financing in order to maintain the development of the Solwara-1 project and its operations

• Nickel/Cobalt mine in Madang Province has resumed operation after approval has been given by Mineral Resources Authority. This was confirmed by operator Ramu NiCo (MMC) Limited. The mining operation was put to stop in April 2016 following a fatal accident at the mine’s Basamuk refinery in Rai-Cost District

• Sir Wilson Kamit, the Board Chairman for Credit Corporation Limited (CCP) announced a 14 toea per share dividend for shareholders during the company’s annual general meeting last week. The 2015 annual report stipulates a recorded profit-after-tax of K63.0m for the year ending December 31, 2015 which is a 158% increase from the previous year’s record. Further, CCP has announced its intention to establish an office in Timor-Leste. Also noted is the progress in its operations in Fiji, Solomon Islands and Vanuatu

• Tisa Savings and loan Society (TSLS) has announced an asset base of K570.0m. New Guineas Islands Representative, William Varmari said the society’s asset grew from K3.0m in 1972 to K75.0m in 2002 and as of last year it grew 660% over the 13 years to K570.0m. TSLS now owns 16 branches around the country

• Education minister Hon. Nick Kuman announced last Friday that the Treasury Department had released the warrant for K75.4m to complete the Tuition Fee Free (TFF) payments for the second quarter of 2016. He further confirmed that this latest payment brings the total TFF payments made to K301.0m

• This week’s BPNG auctions in Central Banks Bills were offered for 28 days and 63days with an oversubscription of K591.6m out of a total of K392.6m on offer. The weighted average yields were 1.1% and 2.4%, respectively. Auctions in Treasury Bills were undersubscribed by K116.0m out of K203.3m on offer. Weighted average yields were 2.6% for 91 days, 4.7% for 182 days and 7.7% for 364 day

• KSi remained unchanged for the week to close at 4,628.6 points, the KSHi was up 0.5% to end at 9,717.7 points supported by an increased in banking stock Bank of South Pacific (BSP) up 0.6% to end at K8.15

International Market Summary

• U.S. stocks slipped slightly as oil prices fell and investors sold safe haven assets they had accumulated after the U.K.’s decision to leave the European Union, but the market pared losses late in the session as investors sought bargains ahead of the closely watched jobs report. The S&P 500 index slid 1.8 points, or 0.1% for the day, to close at 2,097.9 for the week

• European stocks snapped a three-session run of losses as banks bounced back. U.K. blue-chip stocks finished sharply higher, boosted by a climb in financials. U.K. banks rose, shaking off a downbeat assessment on the industry from S&P Global Ratings, revising the outlook on most U.K. banks to negative from stable, but stopped short of outright downgrading the sector. The FTSE 100 regained its upward momentum, in spite of the steadier tone to sterling, gaining 1.1% to6,533.8

• This week saw a selloff in Asian markets as investors sought safe-haven investments such as the Japanese yen in light of renewed Brexit fears when BOE relaxed regulations to encourage lending in the UK. Nikkei was down 3.7% and USD/JPY was down 1.9% while the Shanghai index was up 2.1% for the week

• Australia equities were higher at the close of markets, as gains in the Metals & Mining, Consumer Staples and Consumer Discretionary sectors propelled shares higher, with the S&P/ASX 200 adding less than 0.1% to close at 5,230.5

• Crude oil down 7.4% for the week when news on the US weekly draw missed some forecasts with traders saying that the outlook looked to be volatile underpinned by continued supply glut and subdued growth

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

pdfKFM Weekly Investment Update: Friday, 08 July 2016

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