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KFM Weekly Investment Update: Friday, 11 November 2016

Local Market Summary

• Employers’ providing housing benefits are expected to be on the declining trend as of January 2017 amidst the Government’s proposed Housing Benefit tax which is expected to increase next year. This is one of the measures to be taken by the government to increase its revenue in the 2017 Budget

• According to the Independent Consumer Competition Commission (ICCC), prices for petrol, diesel and kerosene in Port Moresby have increased this month. Petrol prices went up by 16toea to K3.08 from K2.91 last month, diesel rose by 21toea to K2.49 from K2.27 and kerosene increased by 19toea to K2.38 from K2.19. Commissioner and CEO Mr Paulus Ain said these increases were a result of the increase in global crude oil prices

• KPMG PNG has appointed three new appointees to its management. Mr Dean Williams to join the advisory team, Mr Noel Smith joins as tax principal and Ms Alana Wessels takes on the position of associate director in KPMG’s advisory division

• InterOil Corporation (IOC) has declared that the Court of Appeal of Yukon has supported the appeal lodged by Mr Phil Mulacek and overturned the Supreme Court of Yukon’s approval of the pending transaction with Exxon Mobil Corporation. Nevertheless, IOC believes that the current Arrangement Agreement represents compelling value for all IOC shareholders

• Bank South Pacific group (BSP) has reported an increase in net profit after tax (NPAT) in the third quarter of this year. The Group’s NPAT increased by 5.0% to K165.3m, compared to K158.1m in the previous quarter. Total revenue in the third quarter was also up 5.0% compared to the second quarter, driven by the addition of Vanuatu to the Group results and the growth in the loan portfolio, as well as growth in FX income, fees and other income

• In a recent investor media conference, BSP CEO Robin Fleming confirmed that it hasn’t completely ruled out its plan to dual list. Mr Fleming said that from a strict legal perspective BSP continues to pursue liquidity events and it certainly is something that hasn’t been ruled out. Moreover, this is being pursued and BSP can’t be specific at this stage

• Furthermore, BSP has announced the resignation of its Director of the Board Sir Nagora Bogan, KBE. The Chairman Sir Kostas G. Constantinou, OBE has acknowledged that Sir Nagora Bogan had contributed immensely over the years as Director of the Board and as a member of the Board Audit & Risk Compliance Committee

• Highlands Pacific’s (HIG) nickel exploration in the Sewa Bay tenement, Milne Bay is going to advance to its next stage. HIG said this is where significant nickel mineralization has been previously identified.The exploration will be undertaken by HIG and its partners Sojitz Group together with Pacific Metals which will include an airborne laser and imagery survey over the 200 sq km tenement area

• PNG Air has recently announced that it will acquire 5 brand new ATR 72-600 aircraft from the French company ATR which will add to the total ATR fleet totalling to 12. PNG Air CEO Mr Muralee Siva said the addition of the new ATR 72-600s is based on the company’s strategy to operate modern, affordable, comfortable and dependable air services in the country. He also added that the company was delighted with the performance and reliability of the ATR

• The Kina Facility Rate for the month of November 2016 remained at 6.25%

• This week’s auctions in Central Bank Bills were oversubscribed by K72.0m out of K132.0m offered. The weighted average yield for 28 days remained unchanged at 1.17%

• This week’s BPNG auctions in Treasury Bills were oversubscribed by K24.6m out of the K190.0m on offer indicating an increased appetite for short term Treasury securities .The weighted average yield for 182 days was 4.72% while 364 days
was at 7.71%

• The KSi closed 0.7% higher for the week at 4,776.12 points on the back of a 2.2% gain in Newcrest Mining at K46.00. The KSHi was also up 0.4% to end at 10,675.08 points supported by a 3.2% increase in local finance and property investment company stock, CCP, to end at K1.95

International Market Summary

• Global stock markets stumbled shortly after Trump overtook Hillary Clinton in the presidential vote count early Wednesday. However, Global financial markets soon steadied as Trump delivered an acceptance speech pledging to unify a deeply divided nation. But experts warned that the US and global, economy faces a very uncertain future

• US stocks rallied to a record close, gaining 218.19 points or 1.2% to finish at 18,807.88 points.

• European shares concluded slightly lower on Thursday as expectations of fiscal stimulus from U.S. President-elect Donald Trump improved government bond yields, prompting losses among utilities which more than outweighed stronger financial stocks

• The Australian stock market advanced, extending gains from the previous session reflected investor optimism on economic policies could stimulate the U.S economy. The benchmark S&P/ASX 200 added 49.94 points or 3.7% to 5,370.74 points

• PGK/USD remained unchanged for the week to end at .3155, while PGK/AUD appreciated by 0.6% to end the week at .4139

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

pdfKFM Weekly Investment Update: Friday, 11 November 2016

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