KFM Weekly Investment Update: Friday, 10 June 2016

Local Market Summary

• Prime Minister (PM) Peter O’Neill welcomed the loading of 200th LNG shipment saying this was an important milestone for PNG’s economy. The quality of PNG’ LNG produce by ExxonMobil has supported the country’s exposure to the global energy market. The PM also stressed that the investors are investing in PNG because the fundamentals of the country’s economy is strong. He further elaborated that this is a prime time for PNG to invest more in energy production in preparation for the improvement in global economy

• Economist and Director of the Institute of National Affairs Paul Barker has commented on the issues pertaining to PNG’s Economy. In light of the current economic issues he argued that The Government needs to take a concerted and coordinated approach with the private sectors in its efforts to develop and diversify the economy. He stressed that some of the recent state policies that are related to SME, land, agriculture and mining to name a few has implications that could discourage investors

• Nambawan Super Limited (NSL) has announced the relocation of its Head Office to a new building – the Old Parliament Haus Building in Macgregor Street, Port Moresby. Previously NSL’s Head Office was based at Era Rumuna Building in Central Business District of Port Moresby

• Comrade Trustee Services Limited Trustee for Defence Force Retirement Benefit Fund (CTSL) has released a public notice on Tuesday to conduct awareness to its members in regards to changes to the Defence Force Retirement Benefits (Amendment) Act. The awareness is expected to commence this month after CTSL receives clearance from relevant stakeholders to proceed with the awareness and election to the established accumulation fund

• Air Niugini has announced that it will start its second Japan service in July 2016. In preparation for this, the airline and Japanese travel agents and tour operators are continuing to create awareness in Japan. This is also in line with the Government’s initiative to further develop and enhance tourism in the country

• Crown Plaza, a landmark hotel in Port Moresby’s Central Business District has been advertised for sale by ‘expression of interest’. Very rarely do properties of this quality and location become available in PNG

• Business activities in the Port Moresby were disrupted on Wednesday and workers were sent home early as a result of the clash between police and University of Papua New Guinea students. Mr Paul Barker has alluded a point that investors and financiers will be watching closely and hopping this issue is addressed maturely and peacefully to bring confidence in them

• On Thursday, a proposal presentation to develop ethanepower plant in Madang by an American Ethane Company was witnessed by Petroleum and Energy Minister Ben Micah, Mining Minister Byron Chan and officials from the two departments. The Chief executive officer of the American Ethane Company John Houghtaling II said the proposed K6.0bn ethanepower plants will transmit electricity from Madang to Port Moresby and is expected to produce cheaper electricity. The proposal was presented to Central Agencies Coordinating Committee for deliberation before it
goes to National Executive Council for decision

• This week’s BPNG auctions in Central Banks Bills were only offered for 28day maturity with an under-subscription of K2.0m out of a total of K331.6m on offer. The weighted average yield was 1.1%

• Auctions in Treasury Bills were under-subscribed by K129.3m from a total offer amount of K267.7m. Weighted average yields were 2.7% for 91 days, 4.7% for 182 days and 7.7% for 364 days

• The KSi closed 0.4% higher at 4,485.0 points on the back of a 4.1% gain in KSL share price up 6.7%, and the KSHi was also up 2.5% to end at 9,579.2 points supported by increase in share price of BSP(+3.2%) and CCP(+5.6%)

International Market Summary

• On Tuesday, crude oil price settled above US$50 a barrel for the first time since July 16, which boosted the energy companies share prices and as a result the S&P 500 Index rose to the highest level since July 2015

• Further, US equities edged closer to an all-time high, while advances in government bonds pushed some yields to record lows amid speculation central banks will extend policies aimed at jump-starting global growth

• Asian shares pulled back by week-end as investors sought refuge in safe-haven assets amid festering concerns over the June 23 referendum that could see Britain exit the European Union

• Meanwhile, Japan’s Nikkei share average fell 0.4% on Friday and 0.2% for the week, after 10-year government bond yields dropped to a record low, rattling investors who were already cautious ahead of policy decisions from the US Federal Reserve and Bank of Japan next week

• Australian shares have ended the week on a low, as a reflection of the weakness in banks and resource stocks. The ASX 200 fell 0.1% to end at 5,312.6 points

• US treasuries advanced, after a $20.0bn sale of the securities garnered the strongest demand on record from a class of investors that includes foreign central banks and mutual funds. Benchmark 10-year Treasury yields fell two basis points, or 0.03 percentage points, to 1.7 % (Refer graph in the PDF attachment below)

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

pdfKFM Weekly Investment Update: Friday, 10 June 2016

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