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KFM Weekly Investment Update: Friday, 13 July 2018

Local Market Summary:

● According to Prime Minister (PM), Hon Peter O’Neill, it is time now to look at advancing a free trade agreement between two economics where he welcomed the increase in interest by Fiji businesses to invest in PNG’s agriculture, processing, tourism and communications sectors. He said that PNG) will always have mining, oil and gas resources as our anchor for our economy but still need to broaden and diversify the economy base therefore we can learn from Fiji’s vast experience in tourism and hospitality to work together to expand in the tourism sector.

● Australian PM, Hon Malcolm Turnbull signed a deal to deliver almost AU$137.0m in foreign aid funding on a PNG-Australia-Solomon Islands subsea
cable this week during a trilateral meeting with the prime ministers of the two island nations. Mr Turnbull said that spending hundreds of millions of dollars on funding telecommunications subsea cable systems was a very practical way of investing in the future economic growth in the Pacific. He further stated that the Australian federal government would provide the majority of funding for the project with financial co-contribution from both PNG and Solomon Islands.

● Based on the Independent Consumer and Competition Commission (ICCC) observation on the real estate, Commissioner Paulus Ain stated that the prices in real estate industries remained under pressure due to increase in supply and slow economic growth. The real estate agencies lower their prices to remain competitive at the market. However, affordability is an issue as workers’ salaries have not changed and people are still struggling. Mr Ain further said that ICCC would closely observe the industry as it was informed that most agencies have held out their properties in anticipation of another major gas project to come on stream to beef up the prices

● Minister for Mining, Hon. Johnson Tuke updated all the stakeholders and interested parties at the forum held this week for Wafi-Golpu mine project saying the Wafi-Golpu Mine of gold and copper will boost the country’s economy. He said this venture will inject an initial capital investment of US$ 2.8 billion (over K8bil) and if once operational, it will process an estimated ore reserve of 5.4million ounces of gold and 2.8 million tonnes of copper for the next 33 years. He mentioned a Special Mining Lease would be given to the developer if it met all the conditions and requirements of the government which he will ask the state to grant the development license once the state is satisfied with the necessary documents.

● The maximum retail fuel price for each fuel product decreased on average. The ICCC announced this just over the weekend. ICCC stated that for all centres, Petrol prices went down by 6.55 toea per litre, Diesel by 3.18 toea per litre and Kerosene 4.22 toea per litre. The decreases in retail fuel prices for this month were attributed to the decreases in their Import Parity Prices for this month.

● Kina Asset Management released the Net Tensible Asset (NTA) of K1.30 per
share for the month of June that remain unchanged from the previous month.

● This week’s BPNG auctions in Central Bank Bills were under-subscribed by K20.20m out of the total amount offered K240.60m. The weighted average yield for 28 days remain unchanged at 1.40% from the previous week

● This week’s BPNG auctions in Treasury Bills were over-subscribed by K61.20m out of the total amount offered K195.75m. The weighted average yields for 182 days, 273 days and 364 days remain unchanged from the previous week at 4.73%, 6.76% and 8.05% respectively

● Both the KSi Index and KSi Home Index increased by 1.0% and 0.4% to end the week at 5,262.02 and 11,287.40 respectively. This was mainly attributed to the rise in share price of banking and oil industry stock Bank South Pacific and Oil Search. Both stock closed the week at K10.05 and K19.50

International Market Summary:

● US stocks closed higher on Thursday as industrials rebounded and technology names soared, while commodities recovered and the dollar held steady after concerns over an escalating U.S. trade war with China took a breather. All main indexes in the US closed higher with the Dow Jones Industrial Average at 1.9% to 24,924.89, S&P500 at 1.4% to 2,798.29 and the Nasdaq Composite at 1.8% to 7,823.92 points for the week

● European stocks fell on Wednesday as an escalation in the US.-China trade dispute brought a six-session winning streak to an end. The European stock market closed higher with the FTSE at 1.2% to 7,707.74, DAX at 0.6% to 12,570.21 and the CAC 40 at 1.1% at 5,435.18 for the week

● Asian shares extended their recovery on Friday, as investors shifted their focus to bullish expectations for Wall Street earnings and as a weaker yen supported Japanese stocks, though Sino-U.S. trade tensions have tempered exuberance. On the other hand the Asian stock market closer lower for the week with the Nikkei at 3.7% to 22,597.35, Hang Seng at 0.7% to 28,526.25 and Shanghai at 3.1% to 2,831.18

● Australia, trade war fears over Trump’s threat to increase import tariffs on Chinese steel and aluminium continue to have a negative impact on the
Australian Share Market. The Australian market closed lower with the S&P/ASX 200 at 0.1% at 6,268.40 and S&P/ASX 50 0.2% at 6,123.50

KFM Weekly Investment Update: Friday, 13 of July 2018

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