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KFM Weekly Investment Update: Friday, 17 October 2014

Local Market Summary

• Trade, Commerce and Industry Minister Hon. Richard Maru stressed that he desires the Melanesian Spearhead Group (MSG) trade agreement to include services and labour mobility. The government has put financial support of K2.2m towards second MSG investment summit that will be held in Port Moresby in November 2014.

• All issued petroleum licenses in the country are been reviewed by the Department of Petroleum and Energy, Minister Hon. Nixon Duban Says. The petroleum licenses are been reviewed to deal with compliance issues by investors.

• A memorandum of undertaking was signed between Telikom PNG and Fiji Television Ltd for the acquisition of Media Niugini Ltd (MNL). Under the terms of the agreement, Telikom PNG would have exclusive rights to carry out a due diligence on MNL and an assessment of value.

• Sir Frederick Reither, Air Niugini board chairman confirmed that the Government will retain its 51.0% stake in Air Niugini. In addition Sir Reither mentioned that the state would implement the new ownership restructure after the passage of legislation that would make the restructure possible. The implications of the restructure on the board would be that two-thirds of the board would be Papua New Guinean citizens including the positions of chairman and deputy chairman.

• Digicel PNG’s continued investment in communication towers has reached K1.7b or 300 towers according to a recent press release by the firm.

• Oil Search‘s (OSH) share prices rallied during in the week following analysts’ upbeat forecast of EPS of c.¢60 and DPS of to be and ¢25 respectively in 2015. Analysts’ forecasts suggest a full force of increased production from operations in PNG LNG and other oil fields OSH is a partner to. (see graph in the PDF attachment below)

• The Independent Public Business Corporation (IPBC) currently has a 3.2% shareholding in the New Britain Palm Oil Limited Group (NBPOL). IPBC managing director Mr Wasantha Kumarasiri stated that Sime Darby has agreed with PNG government for a call option to increase national shareholding up to a level of 30.0% in NBPOL after the completion of the general offer.

• Kina Asset Management Limited (KAML) announced that the company’s largest shareholder Monian Limited intends to increase its current shareholdings from 19.9% to 25.0% of the total ordinary shares outstanding in KAML. KAML also announced this week its September NTA at K0.98 per share.

• This week’s BPNG Treasury Bills auction was undersubscribed by K87.8m with slight increases in both 182/364 days weighted average yields rates from last week to 4.54% and 7.35% respectively.

• The KSi index was up by 5.6% at 4,049.05 mainly due to the in OSH’s share price while KSi Home Index declined by 5.4% to end the week at 9,052.47 mainly attributed to the decrease in NBPOL and BSP share prices.

• To end the week the PGK depreciated against both the AUD and USD by 1.8% and 1.1% respectively.

International Market Summary

• S&P/ASX 200 was up 1.7% following strong gains from banks and mining stocks that put up solid performance in the week to close (5,276.50).

• US stocks ended the week on a decline, unable to recover from sharp losses in the week with the DJIA down by 2.6% to 16,117.24.

• Russian President Vladimir Putin flew into Milan for peace talks with European Union leaders after threatening to cut the supply of natural gas through Ukraine if the government in Kiev diverts fuel for domestic use. FTSE ended the week 2.3% to 6,195.91.

• Gold ended the week strong rising by 1.4% to US$1,238.7 for the first consecutive weekly increase since July.

• Currency volatility surged to an 8 month high this week as traders were faced with reassessing prospects for global growth, U.S. monetary policy and the spread of Ebola. The AUD rose against the USD by 0.7% to US¢0.8742

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

pdfKFM Weekly Investment Update: Friday, 17 October 2014

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