KFM Weekly Investment Update: Friday, 17 March 2017

Local Market Summary

• The PNG Government invested K316.0m in a massive hotel project in Port Moresby. The Mineral Resources Development Company (MRDC) announced the government’s investment in the K1.2b Star Mountain Plaza Project. According to MRDC managing director Augustine Mano, Bank South Pacific, the government and landowners funded K200.0m, K316.0m and K600.0m respectively. The hotel is expected to be completed two months before the Apec Summit in 2018

• Indonesia’s Ambassador to PNG Ronald Minik discussed with the PNG Government about opening roads near the Wutung border post in West Sepik Province to boost trade between the two countries. Mr Minik explained that establishing road links would help to boost border trade and economic benefits that would stem from more roads between the
two countries

• Ambassador Minik further said, flights between Mt Hagen and Jayapura by PNG Air were aligned with Indonesia President Joko Widodo’s policy on increasing the country’s connectivity in the region. Both governments agreed to the opening of the proposed route by exchanging diplomatic notes that the flights would connect Mt.Hagen and Jayapura three times a week would benefit both countries and increase trade

• National Superannuation Fund (Nasfund) chief executive officer Ian Tarutia assured members that Nasfund made more money now than what they lost as a result of the National Provident Fund saga. This was told by CEO during recent regional employer conference in Port Moresby that Nasfund now has good governance and management in place. He further confirmed that Nasfund has enough in its reserves and at some point in time, those reserves would be allocated to member accounts when the time is right

• Independent Consumer and Competition Commissioner (ICCC) Paulus Ain announced that Kumul Consolidated Holdings will be providing reports to the commission regarding the competition concerns raised on the proposed merger between Telikom, Bmobile and Data Co

• Commissioner Ain further confirmed that the ICCC was also working on legislation thatwould make it mandatory for all proposed business mergers to seek approval from the commission

• Total SA intends to provide gas power and renewable energy sources by 2020 as it diversifies its businesses activities to meet the future global demand for LNG gas. The venture will see the company provide gas power and renewable energy during the
lifespan of the Papua LNG project which is anticipated to begin construction next year

• Newcrest Mining (NCM) installed a new broadband network at the Lihir gold mine that would make its operations more efficient and cost effective. Lihir executive general manager. Mr Jetson said the new satellite provided NCM with the opportunity to access technologies that are reliant on high bandwidth platforms that modernizes the operation

• RamuNiCo mine in Madang Province last month recorded high production of more than 3000 metallic ton. The highest production of metallic was the result of the historical nickel recovery rate this year from 88.17% in January increased to 89.09% in February

• Bank South Pacific (BSP) announced a potential listing on the Australian Securities Exchange (ASX). Group chairman Sir Kostas Constantinou said BSP is aware of speculation regarding a potential secondary listing of BSP on ASX. As previously
announced to POMSoX, BSP has been assessing how it might improve the liquidity of its share register. In that context, BSP confirms that it is currently exploring a potential secondary listing on ASX

• Credit Corporation (CCP) announced that despite the completion of the audit for the company the release of its 2016 results will be deferred due to the delay in obtaining financial data from an associate that is material to the group. CCP expects this to be resolved by 31 March 2017

• This week’s BPNG auctions in Central Bank Bills were offered only for 28 days with an under-subscription of K248.0m out of a total of K268.0m on offer. The weighted average yield was 1.20%

• This week’s BPNG auctions in Treasury Bills were over-subscribed by K83.7m out of the K219.5m on offer. Weighted average yields were 2.55% for 91 days, 4.72% for 182 days and 7.81% for 364 days

• The Kina Securities Index dipped 0.2% to close at 4,848.96 points on the back of a decline in share price of KSL and OSH by 3.7% and 0.5% respectively. Meanwhile the Kina Securities Home Index remained unchanged at 10, 970.59 points

International Market Summary

• US Federal Reserve raised its interest rate by 25 basis points on Wednesday indicating that it was unlikely to speed up monetary tightening. The Fed’s decision disappointed many investors in U.S. as reflected in losses posted by S&P 500. Asian stocks advanced on Friday and supported by dollar’s extended slide that began after the Federal Reserve made its decision on interest rate hike

• European shares hit their highest level in 15 months on after the Federal Reserve signalled no pick-up in the pace of monetary tightening and centre-right Prime Minister Mark Rutte won elections in Netherlands. The pan-European STOXX 600 index ended up 0.7% at 377.73, after touching 377.76, its highest level since December 2015

• Australian shares closed the week modestly higher supported by a lift from financial stocks by the end of Friday, particularly NAB and Westpac who increased their mortgage rates. The ASX200 ended higher by 5,799.60 points or 0.4%

• Oil prices closed the week slightly higher supported by weaker dollar, at US$51.79 per barrel up 0.8% for week

• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD depreciated by 2.2% to end at 0.4099, while AUD/USD rose by 2.2% to end the week at 0.7685

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