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KFM Weekly Investment Update: Friday, 13 February 2015

Local Market Summary

• Prime Minister Hon Peter O’Neil said that the private sector is a strong partner for nation building. These sentiments were made in a breakfast meeting held this week by the Business Council of PNG. He urged both the private and public sector to work together to address challenges faced by PNG through a means of Public Private Partnership programs.

• Petroleum and Energy Minister Hon Nixon Duban has ordered for a review to be carried out into the current PNG Oil and Gas Act so it accommodates the petrochemical sector. Minister Duban said he had directed that the Act be reviewed so that a clear indication be given of what the Konebada Petroleum Park must become as part of a government program.

• The Morobe government has indicated that work on a K233.0m industrial park in Lae will begin this year. With an investment of K25.0m from the National Fisheries Authority, the PNG Marine Industrial Park is among several investments by the provincial government in collaboration with the local fisheries authority.

• The government expects a windfall of about K430.0m when Sime Darby acquires New Britain Palm Oil. Public Enterprises Minister Hon Ben Micah announced this in Parliament. The PNG Government, through Independent Public Business Corporation owns 3.0% with the West New Britain Provincial Government owning 8.0%.

• PNG Ports Corporation has doubled its financial income board chairman Mr Nathaniel Poya said. PNG Ports profit after tax for 2014 was K51.0m. The results come at the back of a stabilising economy with revenue from slightly higher than those of 2013 due to increased efficiency programmes at the ports and strict control costs measures which has kept costs under 6.0% to that in 2013.

• Air Niugini, Air Vanuatu and Solomon Airlines have signed an initial agreement in Honiara, Solomon Islands, last week to engage in a tri-partite code share arrangement on the Port Moresby/Honiara/Port Vila route. Under the agreement, Air Vanuatu and Solomon Airlines would use Air Niugini’s Fokker 100 aircraft.

• A key focus for Oil Search (OSH), its joint venture partners and the Government is to complete the full assessment on the gas resource in Elk/Antelope (PRL 15) and soon move into development phase. OSH managing director Mr Peter Botten said that in a statement after the international court declined to issue the company pre-emptive rights relating to PRL 15 the dispute over the ownership of the Elk/ Antelope gas fields in Gulf.

• Kina Petroleum (KPL) has proposed for liquids stripping to commence in 2018 with barge export of liquids from Kiunga and Daru in the Western Province. Liquid stripping infrastructure was a pre-investment in potential future LNG projects in the area. The project update released this week by KPL further mentioned that the supplies would be imported to Singapore LNG and other North Asian LNG markets.

• This week’s BPNG auctions Treasury Bills were undersubscribed by K14.7m for 364 days with a weighted average yield of 7.4%. There were no offers for 182 day bill.

• The KSi index was down 1.6% to 3,603.27 for the week and KSi Home Index closed 1.9% for the week at 9,798.62.

International Market Summary

• Asian shares gained on Friday (Nikkei closed the week higher 1.5% at 17,913.36 points while the Hangs Seng was flat at 24,669.63) on news of a ceasefire accord in Ukraine, while Sweden’s surprise move to cut its main rate into negative territory and hopes of a resolution between debt-strapped Greece and its creditors burnished risk appetite.

• US stock markets closed higher as jobs markets gained momentum and mortgage rates increased off a 20-month low. For the week, DJIA gained 0.8%, Nasdaq closed 2.4% higher (15-year high while the volatility index (VIX), a gauge of investors’ fear, fell to around 15.3%, its lowest level so far this year) and the S&P 500 gained 3.4%.

• European stocks also closed higher, not being perturbed by concerns that Greek economic growth continues to slip. The CAC 40 and the DAX both closed higher in the week higher at 0.7%.

• Affirming RBA’s assessment of a slowing economy, Australia’s unemployment rate jumped to 6.4% in January as the number of people employed fell by 12,200. Sluggish investment and low commodity prices and falling interest rates were the movers. The ASX S&P 200 climbed 1.0% at 5,877.50 on the last trading day of week.

• The US10 year bond was slightly higher for the week up 0.02% closing at 2.0% while the AU10 lost 0.1% to close the week 2.5%.

• In commodities, Gold edged slightly higher as the US dollar weakened on disappointing economic data. It closed the week at US$1231.80. Crude oil closed slightly higher at US$52.02.

• PNG/USD closed 0.3% lower at 0.3804 while PGK/AUD further depreciated by 0.5% to 0.4885 for the week.

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

pdfKFM Weekly Investment Update: Friday, 13 February 2015

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