KFM Weekly Investment Update: Friday, 19 August 2016

Local Market Summary

• The National Executive Council (NEC) has extended the deadline for impacted landowners and LNG provinces to pay for Kroton shares in the LNG Project held by the National Government. Prime Minister Peter O’Neill, during Parliament sitting on Monday, said under the Umbrella Benefit Sharing Agreement, the LNG provinces and landowners have the option to acquire 4.27% in Kroton for US$1.1bn, and as such NEC has approved the deadline to be extended to December 31, 2016, which should be sufficient to raise capital for the acquisition

• Furthermore, PM O’Neill stated that NEC has agreed to transfer 33.0% of Ok Tedi equity to the people of Western Province, including landowners, mine villages and the provincial government. He added that while this is being determined, Cabinet
has agreed that the shares will be held in trust by the Mineral Resources Development Corporation

• PNG Manufacturers Council CEO Chey Scovell said some areas need to be addressed to allow the manufacturing industry to operate effectively despite the high cost of production. Mr Scovell added that there should be more support from the Government by way of subsidy and considerations towards the manufacturing business to allow for PNG to be competitive and able to export, and that it was also important to focus on increasing capacity for production and assisting current and
potential exporters by finding the right markets and building a value-added proposition

• Head of the PNG Extractive Industry Transparency Initiative (EITI) secretariat Lucas Alkan said companies directly involved in the extractive industry will be required to disclose information regarding their ownership, as per the decision by
the EITI international board. He added that the board wants all EITI implementing countries, to ensure that corporate entities that bid for, operate or invest in extractive assets disclose the identities of their beneficial owners by January 1, 2020

• Lihir Gold Mine has generated US$307.0m (K950.7m) in the financial year ending 30 June 2016 for its parent company Newcrest Mining. According to the company’s full year results, MD and CEO, Sandeep Biswas said Lihir generated the biggest chunk of revenue, producing 900,034 ounces during the year, as Newcrest Mining recorded a 12.0% drop in full-year statutory profit to US$332.0m (K1,028.1m)

• Puma Energy has achieved its recertification of business operations required under the International Organisation for Standardisation. Country Manager Jim Collings said the achievement indicated that Puma’s business operations were safe and
efficient. The company has successfully achieved certification in international safety management, environmental management, quality management, and Australia and New Zealand safety management systems

• This week’s BPNG auctions in Central Banks Bills were offered for 28 days and 63 days with an under subscription of K170.0m out of a total of K451.8m on offer. The weighted average yield was 1.06% and 2.37%, respectively

• Auctions in Treasury Bills were undersubscribed by K181.5m out of a total of K264.4m on offer. Weighted average yields were 4.72% for 182 days and 7.69% for 364 days

• The KSi and KSHi closed 0.8% and 1.6% higher at 4,746.40 and 10,202.34 points. The KSi home index was supported by a 1.8% gain in BSP (to K8.65) and 1.2% gain in CCP (to K1.68) whilst the KSi Index was supported by a 1.7% gain Oil Search (to K17.50)

International Market Summary

• US stocks ended higher Thursday, boosted by a further rise by oil futures and strong economic data that helped offset uncertainty about the timing of the next Federal Reserve interest-rate hike. The S&P 500 gained 5 points, or 0.2%, to
2,187, led by gains in energy and utilities shares

• European’s main stock benchmark closed with gains for the first time in five sessions, with resource companies helping to lead the charge higher on bets the US Federal Reserve won’t raise rates this year. The Stoxx 600 gained 0.7% to end
at 342.9

• Shares in Asia were mixed, with some regional currencies firmer against the weaker dollar, while China’s plans to further open its equities market gave a delayed boost to Hong Kong stocks. Oil’s push into bull territory boosted energy stocks across Asia early on Friday, but the gains failed to lift other sectors and kept most of the region’s share markets in the red

• Australian shares ended slightly higher for the session, but in keeping with a lowvolatility week the ASX closed pretty much flat for the week. On the day, the benchmark index ASX200 added 0.3% to 5526.7, while for the week, slipped 0.1%

• Oil futures stretched their streak of gains to a sixth session in a row on Thursday to settle at their highest level in nearly two months—lifting crude into a bull market. A larger-than-expected weekly decline in US crude stockpiles and a weaker dollar lifted prices by more than 20.0% from their recent lows as some traders held out hope that major oil producers will ease output. Brent rose 2.1% to settle at $50.89 a barrel (refer graph)

• Gold and silver futures gained after Fed meeting minutes issued a day earlier raised doubts about the speed and scope of interest-rate hikes, boosting the allure of holding precious metals


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pdfKFM Weekly Investment Update: Friday, 19 August 2016

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