KFM Weekly Investment Update: Friday, 12 December 2014

Local Market Summary

• The US$292.0m (K766.0m) Lae Port Project is completed ahead of time and is to be launched next week. The Lae Port Tidal Basin is the largest and complex project undertaken by the Asian Development Bank (ADB) and the PNG Government through the Independent Public Business Corporation (IPBC). Both the ADB and IPBC echoed similar praises of the completion of the project.

• The ADB’s active portfolio in the country is valued at US$1.1b. ADB’s activities include 22 ongoing loans for 11 projects, eight grants and other technical support projects. Country director Mr Marcelo Minc announced this while presenting the ADB’s role in supporting the PNG governments investment plans.

• The Government of PNG formally acquired its 15.0% interest in the Nautilus Minerals Solwara 1 project after necessary processes were completed. Chairman of Nautilus Minerals Mr Geoff Loudon said that development works on the project will start in 2017. Mr Loudon stressed that the progress of the project depended on the ships that will be used for the project. In November this year, Nautilus engaged into an agreement with Dubai based marine solutions company Marine Assets Corporation for a charter to be developed for use in the project by 2017.

• The Independent Consumer and Competition Commission (ICCC) has announced lower fuel prices starting this week. Petrol prices are now K3.2 per liter, K2.7 per liter for diesel and kerosene prices at K2.7 per liter. ICCC chief Dr Billy Manoka indicated that the prices was due to an oversupply in the international oil markets.

• Anglo American has entered into a joint venture agreement with Highlands Pacific over it’s Star Mountain copper project in Western Province. Anglo American could earn a 15.0% interest in the Star Mountain project by spending US$25.0m on exploration over a four year period. Highlands Managing Director Mr John Gooding said it was refreshing and encouraging to one of the world’s largest mining companies acknowledges the significance of our exploration.

• Interior has appointed Dr Ellis Armstrong as one of its directors which is ideal as the company continues to develop the Elk and Antelope gas fields. He is a former chief financial officer of BP Group’s global exploration and production business with more than 30-years of international oil and gas experience covering strategy and operations, major integrations, acquisitions and disposals and government relations.

• This week’s BPNG auctions Treasury Bills were under subscribed by K51.0m for 182 days with a weighted average yield of 4.7% and K66.7m for 364 days with a weighted average yield of 7.4%.

• The KSi index was down by 0.4% to 3,593.67 while KSi Home Index dropped 3.1% to end the week at 9,556.85.

International Market Summary

• US stocks fell, extending the week’s decline for the Standard & Poor’s 500 Index, as energy shares renewed a selloff after OPEC cut its forecast on 2015 demand for crude. The DJIA and the S&P500 closed the week lower 2.0% and 1.9% at 17,596.34 and 2,035.33 respectively.

• The extra yield Treasury 30-year bonds offer over five-year notes shrank for an eighth week, the longest run in 22 years, as the outlook for slow inflation fuels demand for the longest maturities.

• Asian stocks were mostly lower, weighed down by economic growth concerns throughout the region. The Nikkei closed the week lower 3.1% at 17,371.58.

• The Governor of the Reserve Bank of Australia (RBA), Mr Glenn Stevens indicated that the Australian dollar would decline in 2015 as a result of the economy performing as the RBA forecasted. Mr Steven’s made this statement in the light of calls for short term interest rates to be cut.

• The price oil continued its decline below US$60.0 per barrel, on the back of speculation that the Organisation of the Petroleum Exporting Countries (OPEC), would defend market share against US shale producers. Oil is on the verge of sliding for the 10th weekly drop since October this year. Light crude closed the week lower at US$59.4 per barrel down 9.8% for the week (refer to graph in the PDF attachment below).

• Gold prices retreated from a six-week high, as some traders took profits on the recent rally and others adjusted their expectations for the timing of interest-rate increases in the US. Gold is up 2.6% for the week at US$1,221.7 per ounce.

• To end the week, PNG/USD closed lower 0.3% at 0.3889 while PGK/AUD appreciated by 0.3% from 0.4657 to 0.4700.

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

pdfKFM Weekly Investment Update: Friday, 12 December 2014

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