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KFM Weekly Investment Update: Monday, 21 May 2018

Local Market Summary:

● According to Deputy Prime Minister and Treasurer Hon. Mr Charles Abel, the cost
of internet service in the country has decreased by almost 50.0% over the past 10
years. He added that the Government is addressing the issue of the costly service
as well as the inaccessibility in most parts of the country by engaging the Australian
Government to construct an international submarine cable which will significantly
boost internet service and reduce related expenses in the country

● Foreign Minister Hon. Mr Rimbink Pato and Japan’s Foreign Minister Hon. Mr Taro
Kono officially signed the revised air service agreement between both countries.
According to Mr Pato, Air Niugini has two weekly services to Tokyo Narita Airport,
the third weekly service will now include the Federated States of Micronesia (FSM)
which means many of PNG’s and FSM’s exports mainly tuna will have accessibility
to the markets of Japan as well as inflows from tourists

● Alternatively Mr Kono said he hopes the number of flights between Japan and PNG
increase and also strengthen connectivity between Japan and the Pacific Island
countries

● The merge of the State’s telecommunication companies Telikom PNG, Bmobile-
Vodafone and Dataco are set to be fully completed by mid-2019 under the new
amalgamated name Kumul Telikom Holdings (KTH).Chairman of KTH Mr Andrew
Johnson gave the status update of what he described was an evolutionary merger
of peer companies

● The Mineral Resources Authority (MRA) has appointed acting managing-director
Mr Nathan Mosusu for the next three months. Mr Mosusu has vowed to do his best
in leading MRA into the future and added that the mining sector has been the
country’s economic base and contributed over 60.0% of the nation’s revenue

● During the PNG Resources Sector Media Workshop, the Executive General
Manager for Wafi-Golpu Joint Venture Mr Graig Jones said the mine will see an
investment of K8.8b. Meanwhile the result of the Special Mining Lease application
for the mine is yet to be determined. According to joint venture partners Newcrest
Mining and Harmony Gold, an overall capital investment of K16.7b will be made
throughout the life of the mine which is estimated to be 28 years

● Chairman of the Board of Credit Corporation (CCP), Sir Wilson Kamit, CBE,
announced that its PNG Chief Executive Officer (CEO), Mr Peter Aitsi, has been
appointed to the Boards of CCP’s finance companies operating in Fiji and the
Solomon Islands. The regional appointment relates with the endorsement of the
‘Fit and Proper’ requirements by BPNG that formalised the process of Mr Aitsi’s
appointment as CEO of the CCP Group

● Kina Asset Management released the Net Tangible Asset (NTA) per share for the
month of April at K1.29. This is an increase of 1.57% from the previous month’s
NTA

● This month’s BPNG auctions in Government Inscribed Stock were over-subscribed
by K5.4m out of the K120.0m offered which included a new 2028 series
(S15112028) amounting to K35.0m. The weighted average yield for S15022021 at
9.48%, S15052022 at 10.48% and S15112028 at 12.57%

● This week’s BPNG auctions in Central Bank Bills were over-subscribed by K72.5m
out of the K240.9m on offer which only offered the 28 day term. The weighted
average yield remained unchanged at 1.40%

● This week’s BPNG auctions in Treasury Bills were under-subscribed by K159.5m
out of the K270.9m on offered. The weighted average yields remained unchanged
from the previous week with 182 days at 4.70%, 273 days at 6.76% and 364 days
ay 8.04%

● The KSi Index remained unchanged at 5,362.26 points while the KSi Home Index
increased by 0.1% to 11,096.28 points mainly attributed to the rise in share price
of banking and financial stock Bank South Pacific by 0.1% to end at K9.84

International Market Summary:

● The second round of trade negotiations between the US and China commenced
this week and although there is concerns that it would be tough, there might still
be scope to resolve some issues. Both US and Chinese officials maintain that
differences will remain at significant levels.

● Officials from the US and China met in an effort to ease growing concerns over the
possibility of a trade war this week in Washington and China announced, as an
olive branch, that it was dropping the anti-dumping probe into US imports of
sorghum, a cereal crop used for a variety of agricultural products.

● US stocks ended the week on a lower note. The Dow Jones Industrial was down
0.5%, the S&P 500 was down 0.3% and NASDAQ index was also down 0.3% for
the week.

● Asia stocks had a quiet week as markets wait with caution over developments in
trade negotiations being held between the US and China. The Nikkei was up 0.8%
and the Shanghai Composite was up 0.8% for the week.

● Oil prices maintained their positive performance this week on ongoing supply cuts
under the OPEC-led agreement on the back of consistent demand and looming
US sanctions against Iran. Light crude oil price was up 1.3% and Brent crude oil
price was up 3.1% for the week.

pdf KFM Weekly Investment Update: Monday, 21 of May 2018

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