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KFM Weekly Investment Update: Friday, 13 April 2018

Local Market Summary:

● The Department of Treasury has recently released the Updated Medium Term Debt Financing Strategy (MTdS) for the next five years. The MTdS is based on the updated economic conditions and events with the core objective of strengthening existing strategies. That is aimed at maintaining debt and financial risks at sustainable levels while minimising the cost of debt but with revenue lower than anticipated in recent years

● Furthermore, the Issuance Plan for the second quarter is  K370.0m giving a total debt allocation of K180.0m for April , K120.0m for May  and K70.0m for June

● Minister for National Planning and Monitoring Hon. Richard Maru has stated during the Parliament Session that the Tax Credit Scheme has been suspended due to no inputs from various Governors, funds used outside of areas not allocated and no transparency on how contracts are used

● Loan agreements to benefit subsistence farmers was signed between the Asian Development Bank and the Japan International Cooperation Agency alongside Olam International and Café Outspan Vietnam. The loan agreements are worth $163.0m which aims to improve sustainable agricultural value chains that will benefit up to 20,000 subsistence farmers in Indonesia, PNG, Timor-Leste and Vietnam 

● Coca-Cola Amatil PNG opened a new can-line at its Lae productions in Morobe Province. The German built can-line facility is worth K35.0m and is fully automated. Deputy PM Hon. Charles Abel who officially launched the facility said the Government is proud of such private sector investments and looks forward to partnering with industries to move the economy

● ExxonMobil has announced an increase of 4.36tn cubic feet of gas in the P’nyang field. According to Company President Mr Liam Mallon, this is an 84.0% increase since 2012 which would now add 8.0m tonnes of LNG development and double the capacity of the existing LNG plant operated by ExxonMobil. They continue to work closely with joint venture partners and the government to progress the P’nyang field to a world-class resource

● In addition, ExxonMobil has advised that the PNG LNG Project, which was shut in following to the 7.5 magnitude earthquake in the Highlands Region on 26 February, has safely recommenced LNG production. LNG exports are expected to resume shortly. Oil Search’s Managing Director Mr Peter Botten said the recommencement of operations at the PNG LNG Project is ahead of ExxonMobil’s previously guided eight week timeframe and is a major achievement by the operator. At present, one LNG train is operating at the LNG plant site, with the second train expected to start up as production from the Hides field and the Oil Search-operated Associated Gas fields ramps up

● Kina Asset Management Ltd released the Net Tangible Asset (NTA) per share for the month of March at K1.27. This is a drop of 0.78% from the previous month’s NTA

● This week’s BPNG auction results in Central Bank Bills was under-subscribed by K107.5m of the total amount of K633.5m on offer. The weighted average yield for 28 days and 63 days were at 1.40% and 2.35% respectively

● This week’s BPNG auction results in Treasury Bills were over-subscribed by K279.7m of the total amount of K255.2m on offer. The weighted average yields for 182 days, 273 days and 364 days were 4.72%, 6.76% and 8.04% respectively

● Both the KSi Index and KSi Home Index remained unchanged to close  at 5,142.30 points and 10,972.27 points respectively for the week end

International Market Summary:

● The Reserve Bank of Australia (RBA) published their latest Financial Stability Review this week saying that strong global economic conditions over the last six months indicate that investors are more optimistic about market outcomes. However RBA warns that high inflation-driven rise in interest rates could cause a shock in global markets by way of a correction. An example of this outcome has been seen in recent months when the US Federal Reserve  raised interest rates last month

● The ASX finished the week higher as global trade and Middle East tensions eased. The benchmark ASX200 index closed up 0.7% at 5829.10 points

● US President Donald Trump ordered his senior economic and trade advisors to review the possibility of the US re-joining the 11-nation Trans Pacific Pact (TPP). This surprising move comes a year after Trump withdrew from the TPP. Policy makers in Asia Pacific have responded with scepticism

● China’s trade surplus with the US surged 19.4% in the first quarter as trade tensions between the world’s two largest economies rumble. The surplus reached US$58.0b said Customs bureau spokesman Huang Songping at a briefing in Beijing. Exports to the US rose 14.8%, while imports grew 8.9%. Total trade between the two nations rose 13.0% during the quarter, China’s data showed, but the first shots in the latest trade spat were not likely to be felt in the recording period

● PGK/USD remained unchanged for the week to close at 0.3075 while PGK/AUD depreciated by 1.5% to end at 0.3948. This was driven mainly by the crosscurrency effect of the USD strengthening against major currencies

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

pdf KFM Weekly Investment Update: Friday, 13 of April 2018

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