KFM Weekly Investment Update: Friday, 10 October 2014

Local Market Summary

• There is a growing opposition to the trans-highlands highway that will link Port Moresby with other regions of the country through Lae. The highway will most likely simulate more economic activity and is crucial for the county’s development. The oppositions are mainly related to social issues that will be created by the highway linkage.

• Total SA has been welcomed by Prime Minister Peter O’Neill to advance the Elk-Antelope Liquefied Natural Gas (LNG) project in Gulf. “Total SA will pay US$470 million (K1.14 billion) for a 42% interest (32.5% if the government executes its option to join the project) with a contingent payment estimated by Total at approximately US$590 million (K1.44 billion). The transaction remains subject to the approval of the PNG Government,” the French firm said in a statement.

• New Britain Palm Oil (NBPOL) share price rose by c. 77% yesterday (10/10/14) following the $1.7b hostile offer by Sime Darby. The offer price of £7.2 was at 85.0% premium to the last closing price. In a press conference today (10 October 2014), with NBPOL and Sime Darby, the management said the offer is for the best interest of all stakeholders. Both Sime Darby and NBPOL have processing facilities in England and Liverpool respectively and the takeover would increase production base and market network under a single management. Acquisition of NBPOL will see Sime Darby become the largest oil palm producer (see chart in the PDF attachment below).

• Airlines PNG (CGA) made an announcement to raise K20 Million new capital from PNG institutions and 120 million share buyback from major shareholder and founder Sir John Wild for a nominal value of K1.

• Newcrest’s Gold production in the September quarter dropped compared to the June quarter due to lower gold grades at Gosowong, Cadia Valley and Lihir. Production for September quarter was 561,731 ounces of gold and 24,831 tonnes of copper.

• ExxonMobil has announced that as of Monday this week (06/10/14), it has shipped 22 cargoes from the Papua New Guinea Liquefied Natural Gas project to Japan. The cargoes are equivalent to about 1.6m tonnes of LNG with the value of each cargo between US$50 million (K121.7 million) to US$60.0m (K146.1m)

• This week’s BPNG Treasury Bills auction was undersubscribed by K121.8m with slight increases in both 182/364 days weighted average yields rates from last week to 4.51% and 7.33% respectively. The Kina Facility rate remained unchanged at 6.25%

• The KSi index was up by 2.9% at 3,834.58 while KSi Home Index rose to end the week at 9,570.80 up by 24.0% attributed to the increase in NBPOL’s share price

International Market Summary

• The ASX S&P 200 fell by 2.4% to end the week at 5,188.30 attributed to the losses in the financials due to weakening AUD against USD which is seeing foreign investors withdraw out of the high-yielding banks.

• The Dow Jones Industrial Average declined by 2.1 points, putting US stocks on course for the most volatile stretch since 2011 amid growing concerns about the pace of global growth.

• European shares continued their recent slide as worries about Europe’s floundering economy outweighed recent conservative news from the US Federal Reserve. The FTSE ending the week 1.5% lower at 6,431.85

• Stocks in Hong Kong ended with a gain for the week in as the Hang Seng gained 0.1%, after the US Federal Reserve signalled it would move cautiously on rate increases.

• Reserve Bank of Australia keeps the cash rate unchanged at 2.5% in the light of a rise in investor housing lending.

• Gold was up by 2.4% to U$1,221.7 helped by the Fed’s conservative interest rate outlook while both Brent and Light Crude declined by 4.3% and 6.6%, respectively, as a result of weak global outlook and its impact on the demand for commodities

• To end the week the PGK depreciated against both the AUD and USD by 1.4% and 0.1% respectively.

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

pdfKFM Weekly Investment Update: Friday, 10 October 2014

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