KFM Weekly Investment Update: Friday, 17 April 2015

Local Market Summary

• The World Bank has projected PNG’s GDP growth to reach 16.0% this year, with major LNG project production expected to peak in 2016. The bank’s 2015 Economic Update said PNG’s economy’s transition, following the ExxonMobil-led PNG-LNG project move from construction to production in 2014, would result in smaller spill overs to the rest of the economy.

• BPNG Governor Mr Loi Bakani called on the government not to repeat past experiences and invest in the non-mineral sectors to withstand the effects of declining oil and other commodity prices. He said with the commencement of production and export of LNG, the Government should use the opportunity to invest in the non-mineral export sectors, especially, agricultural, fisheries and forestry sectors, to broaden the export base of the economy and reduce the economy’s dependence on the mineral sector.

• National Petroleum Company PNG (NPCP) Managing Director Mr Wapu Sonk said revenues from the PNG LNG project were being kept in an account until the clan vetting process was completed. The beneficiaries are a collective group of people and the clan vetting process will identify and establish who makes up the group or groups of beneficiaries. In the absence of a properly conducted clan vetting process, the money would be kept at BPNG. BPNG Governor Mr Bakani had said earlier that revenues generated from the PNG LNG project were being kept at the main government account.

• NPCP is looking at raising billions of dollars to fund new oil and gas projects, as the country battles a sharp slump in forecast revenue from a plunge in prices for the commodities. NPCP holds a 16.6% stake in the PNG LNG project, which operator ExxonMobil Corporation expressed interest to expand.

• PNG plans to export another 300 tonnes of seaweed to Asian markets this year, National Fisheries Authority says. Aquaculture and Inland Fisheries executive manager Mr Jacob Wani said the country did a trial harvest of seaweed and did the first export to China in 2013. Mr Wani highlighted the high cost of domestic shipping as a challenge, adding that NFA was considering options to bring down the freight cost.

• PNG DataCo has urged National Information and Communications Technology Authority to grant licenses to investors based on the government’s continued reforms and policies. DataCo was established to operate and maintain the National Transmission Network (NTN), and would supply NTN bandwidth to network license holders such as Digicel, Telikom PNG, Bmobile and internet service providers on a wholesale basis.

• Newcrest Mining has spent A$70.0m (K141.0m) on community projects at its sites on Lihir island, New Ireland and Hidden Valley and Wafi Golpu in Morobe. This figure represented 70.0% of the A$97.3m (K197.05m), the miner spent within its global operations from July 2013 to June 2014.

• City Pharmacy Group (CPL) opened its new retail business, Jacks of PNG.

• Kina Asset Management announced an NTA of K1.04 for March down 2.0t from the February NTA.

• BPNG circulated April GIS invitations for next week’s auction for a total amount on offer of K160.0m for 2018, 2020, 2022 and 2023 series.

• This week’s BPNG auctions in Treasury Bills were undersubscribed by K2.1m out of the K200.0m on offer. Weighted average yields remained flat at 4.7% for 182 days and 7.4% for 364 days from last week’s auctions.

• The KSi index closed the week 8.6% higher at 3,861.2 from 3,555.0 and the KSi Home Index both closed the week 0.2% lower at 9,751.9 from 9,772.1.

International Market Summary

• U.S. stocks ended the week marginally higher as lingering worries about upcoming corporate earnings reports offset enthusiasm about a trio of soaring Wall Street debuts. The S&P 500 gained 0.1% to 2,105.0.

• Japan’s Nikkei share average closed the week lower after weaker-than-expected US housing data soured the mood, while investors awaited Japanese corporate earnings next week. During the week the Nikkei declined by 1.4% to 19,625.9.

• Britain’s FTSE 100 equity index is seen outperforming rival continental European markets at the weeks end, with UK mining stocks expected to be supported by a rise in the copper price. Despite a strong close to the week the FTSE 100 closed the week 0.4% lower to 7,060.5.

• The ASX ended the week on a sour note, dropping below 5,900.0 points on Friday after an early rally on Monday that took it within a whisker of 6,000.0 points ran out of fuel. The benchmark S&P/ASX200 index fell during the week by 1.5%, to 5,877.9.

• Brent crude prices rose this week to US$63.5 up 9.7%. This was in spite of Crude output climbing 13.0% from a year earlier to 9.3m barrels a day in March, the American Petroleum Institute said in a monthly report (refer to graph in the PDF attachment below ).

• Gold prices reversed gains, after regional US data showed stronger-than-expected business activity this month. Declining by 0.4% during the week to close at US$1,200.3 per ounce.

• PGK/USD ended flat at 0.3725, while PGK/AUD depreciated by 1.5% to close at 0.4780.

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

pdfKFM Weekly Investment Update: Friday, 17 April 2015

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