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KFM Weekly Investment Update: Friday, 10 August 2018

Local Market Summary:

● Prime Minister (PM) Hon. Peter O’Neil said PNG will continue to do business
with economies that offers the best deal. He made the comment in response
to a tri-lateral fund from United States (US), Australia and Japan that was
recently announced. He added that the competition between China, Australia
and US to provide funds at lower rates is in the best interest for the country
and PNG will not participate in any geo-political issues

● Deputy PM and Treasurer Hon. Charles Abel, presented the Mid-Year
Economic and Fiscal Outlook and said, the impact of the February earthquake
created additional expense for the Government that were not necessarily
budgeted for. The big impact it had was on the production side which obviously
affected resource projects in those areas. Notwithstanding this, Mr Abel
remained optimistic that the government was on track with its Budget
projections for the year as a result of quick resumption of the PNG LNG
production facility supported by the increase in commodity prices which
performed above expectations

● The Australian Government will finance the construction of a new satellite
tower valued at K33.0m aimed to cater for the internet needs of APEC Leaders’
during the APEC Summit in November. Minister for Public Enterprises and
State Investment, Hon. William Duma said this is part of the Australian
assistance to the country’s Information and Communication Technology (ICT)
sector and also to support the 2018 APEC ICT requirements. PNG DataCo is
now working with an international operator called SERS Networks to deliver
6Gbps lower latency internet service between Port Moresby and Sydney. The
O3B satellite system is the highest satellite service capacity and is expected
to be completed and in use by the end of September

● The Independent Consumer and Competition Commission announced the fuel
prices for this month to increase just over a toea apart from a slight decrease
in diesel. The retail fuel price movements are attributed to the price movements
at the Import Parity Price level for this month. Port Moresby fuel prices for
petrol and kerosene increases from K3.71 to K3.72 and K3.12 to K3.15
respectively while diesel decreases to K3.40 from K3.41. For all centres, the
maximum retail fuel price for each fuel product in the country will change on
average

● Newcrest Mining (NCM) announced that it is conducting its carrying value
review of assets as at 30 June 2018 in accordance with its usual policy and
processes. While the 2018 Financial Report is yet to be finalised by the Board
of Directors and remains subject to finalisation of the external audit, the Board
considers it likely that a reduction in the carrying values of certain assets is
required with a non-cash earnings impact in the range of AUD$260.0m to
AUD$270.0m after tax

● In addition, NCM’s free cash flow during the 2018 financial year has been
applied to AUD$460.0m reduction in net debt; AUD$105.0m paid in dividends
to NCM’s shareholders; AUD$24.0m paid in dividends to non-controlling
interests; and $11.0 purchasing Newcrest shares to meet future entitlements
of share based incentive schemes. NCM expects net debt as at 30 June 2018
to be $1,040.0m which is $459.0m lower than as at 30 June 2017. The
Financial Report for the year ended 30 June 2018 is scheduled to be published
on 22 August 2018

● Based on BPNG’s assessment of key macroeconomic indicators including
inflation, the Kina Facility Rate for the month of August is maintained at 6.25%

● This week’s BPNG auction in Central Bank Bills were under-subscribed by
K7.40m out of the total amount offered K220.40m. The weighted average yield
for 28 days remain unchanged at 1.40% from the previous week

● This week’s BPNG auction in Treasury Bills were under-subscribed by
K67.05m out of the total amount offered K210.47m. The weighted average
yields for 63 days, 182 days and 364 days all remained unchanged from the
previous auction at 2.36%, 4.73% and 8.04% respectively. There were no bids
for 91 days and 273 days

● The KSi Index remained unchanged at 5,315.11 whereas the KSi Home Index
increased by 0.1% to end at 11,232.57 points mainly attributed to the rise in
share price of banking and financial stock Bank South Pacific to close at
K10.06 (+0.1%)

International Market Summary:

● Global shares rose, following US stronger leads from the US with a raft of
strong second quarter earnings fuelling positivity in the economy. US shares
slightly pared back from record levels early in the week with losses in the
energy sector. All major indexes closed higher for the week by 0.2%, 0.5% and
1.0% with the DJIA at 25,509.23, S&P500 at 2,853.58 and Nasdaq at 7,891.78
points respectively

● The Australian share market has closed the week higher, lifting on the back of
three positive sessions and coming within just a few points of a fresh 10-year
high. The S&P200 and S&P50 both closed higher for the week by 0.7% and
0.9% to end at 6,278.40 and 6,139.40 points respectively

● Asian markets closed mostly lower in Friday’s trade. Trade concerns have
been in the spotlight with China announcing earlier this week that it would
retaliate against recent US tariffs. The major index, Nikkei closed lower by
1.0% to end at 22,298.08 although the Hang Seng and Shanghai increased by
2.4% and 2.1% to end at 28,343.18 and 2,796.49 points respectively
10 August 2018

KFM Weekly Investment Update: Friday, 10 of August 2018

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