KFM Weekly Investment Update: Friday, 16 March 2018

Local Market Summary:

• The National Executive Council (NEC) will meet next Monday to discuss relieve
funds for earthquake and recall Parliament in the next seven days to deliberate on
the expenditure. This was revealed by Prime Minister Peter O’Neil in a news
conference during the week
• PNG Air announced an improved performance in 2017 with 28% growth in revenue
compared to corresponding period. The announcement released through Port
Moresby Stock Exchange stated that the firm recorded an operating loss of K4.0m
which was an improvement from 2016 loss of K34.84m. The main highlights during
the year included winning the contract from Newcrest’s aviation requirements and
added 2 brand new ATR 72-600 aircrafts to its fleet
• Kina Asset Management Ltd (KAM), Pomsox listed company released the 2017
full year results stating a Net Profit (NPAT) of K8.4m translating to an increase of
35.5% from the previous corresponding period. KAM’s full year total return for
shareholders was 16.8% and as a result, Board of Directors have declared a final
dividend of 3 toea per share to be paid to shareholders in July. This would bring a
total dividend paid of 5 toea for the year of 2017
• Kina Asset Management Ltd also released the Net Tangible Asset (NTA) per share
for the month of February at K1.28. This is a drop of 1.5% from the previous
month’s NTA
• MiBank has recently opened its branch in Kokopo, East New Britain Province.
CEO Tony Westaway stated that Kokopo is a central place in the Islands region in
which MiBank will offer its products and services through digital financial services
initiatives throughout the region. BPNG Governor Loi Bakani while at the opening
ceremony reminded the guests that MiBank started from humble beginnings as
Wau Microbank 10 years ago and happy to see its board driving its expansion and
extend innovative products and services to the grassroots people
• Nambawan Super is now pushing for a change to the legislation for tax on
superannuation. Chairman Anthony Smare said a team has been set up to work
for that change. He explained that it will be beneficial for both parties, the
government and the members of the superannuation as this will increase savings
for the members and investment for the economy
• Meanwhile, Minister for State – Owned Enterprises (SOE) and Public Investment
William Duma said he will not merely decide on NSL’s bid to acquire equities in
State Owned Enterprises. He made this statement in response to a recent
announcement by NSL’s Chairman Anthony Smare that the super fund is ready to
take up equity in SOEs to settle the unfunded super component for the
government. Mr Duma expressed that he is opened to the idea in which strong
governance structures and disciplines is needed in SOE’s but reluctantly said that
similar representations has been made before but nothing good has happen
• According to Port Moresby Stock Exchange, Oil Search (OSH) Executive Director
Gerea Aopi resigned from the OSH board as of 16 March 2018. OSH Chairman
Rick Lee thanked Gerea for his outstanding service to the OSH board for the last
twelve years and said an international search to find replacements for Gerea is
almost complete and an announcement will be made shortly
• This week’s BPNG auction result in Central Bank Bills offered for 28 days only was
over-subscribed by K22.00m out of the total amount of K355.00m on offered. This
indicates that there was an increase in appetite for shorter dated securities. The
weighted average yield for 28 days remained unchanged at 1.40% from the last
auction week
• This week’s BPNG auction results in Treasury Bills were over-subscribed by
K237.04m out of a total amount of K298.78m on offer. This indicates that there
was an increase in appetite for longer dated securities. Weighted average yields
for 182 days, 273 days and 364 days remained unchanged at 4.72%, 6.76% and
8.04% respectively from the last auction week
• KSi Index slightly increased by 0.1% to close at 5,532.37 points while the KSi
Home Index remained unchanged to close at 10,900.86 points from the previous
week. The increase in KSi was attributed to the rise in share price of Oil Search
by 0.3% to end the week

International Market Summary:

• Reports of more chaos in the Trump administration sparked further concerns
throughout the markets around the impact of interest rates and high import tariffs
on stability of global growth and possible trade wars.
• Reports of changes to key roles in the Trump administration has affected US
stocks as seen in the weekly market movements. The Dow Jones Industrial index
was down 1.8%, S&P 500 was down 1.4% and NASDAQ index was down 1.0%
for the week.
• Asia and Europe stocks saw mixed results with the FTSE index down 1.2%, Nikkei
was up 1.0% and Shanghai Composite was down 0.8%.
• Market volatility has moved investor sentiment into risk-averse-mode causing the
US dollar to drop against the Japanese Yen by 0.7% and gold price dropped 0.5%.
• The International Energy Agency (IEA) said that global demand for oil would
increase this year but warned that supply levels are growing at a faster pace. This
has caused oil prices to drop 1.2% (Light Crude) and 0.5% (Brent Crude)

pdfKFM Weekly Investment Update: Friday, 16 of March 2018

Online banking