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KFM Weekly Investment Update: Friday, 19 September 2014

Local Market Summary

• Prime Minister Peter O’Neill stated during the commissioning of gas turbine in Kanudi power station that the government’s intervention in purchasing gas turbines for both Lae and POM was necessary to ease the country’s shortage of energy supply. He added that this could help contribute to the growth of the country’s economy and provide consistent power supply to people.

• Mineral Resource Authority Managing Director Philip Samar stressed the lure of Papua New Guinea (PNG) minerals to Chinese investors, in his presentation at the recent 7th China International Nickel Industry Summit in Fujian, China. Mr Samar also mentioned that PNG had world class nickel and cobalt exploration projects that needed further financing and capital injections. This presentation was given in light of the Indonesian and Philippines Government moving to pass laws restricting export of nickel ore to China.

• China’s Exim Bank released a loan marking the start of development on the K212m Pacific Marine Industrial Zone (PMIZ) project in Madang after being delayed due to a court case by a Madang Plaintiffs. The project is the biggest in the region, and is jointly funded by China’s Exim Bank with K190 million and K22m by the PNG national government.

• Trans Wonderland Ltd, a locally owned trucking company recorded a net profit of K15.7m in 2014, up by K1m from last year. The increase in net profit was attributed to the LNG project, Managing Director Larry Andagali announced during the firm’s annual general meeting in Port Moresby.

• Oil Search Limited’s chief executive officer Peter Botten has called for gas developers to co-operate and share facilities, stating that there is enough gas capacity in the country for at least three more LNG trains over the next five-to-seven years. Significant reserves have already been discovered in PNG, which will require building at least three new trains at a cost of between US$25b (K60.5b) to US$28b
(K67.8b).

• New Guinea Energy Ltd announced that its 50% joint venture with Maps Tuna Limited, Western Drilling Limited (WDL), has commenced drilling a well for Interoil Corporation with WDL Rig 1 this week.

• During PNG’s 39th independence anniversary celebration on Tuesday in Honiara, Solomon Islands it was highlighted that more than 20 Papua New Guinean companies are operating in the Solomon Islands with a total investment of SBD$500m (K164.79m) as part of the two countries continuous strengthening of relationship in trade and investment.

• This week’s GIS auction was oversubscribed by K68.9m. The rate for 2017 series increased by 0.05% to 8.03% and the rates for 2020/2024/2027 & 2031 declined by 0.13% to 11.77%, 0.15% to 12.73%, 0.14% to 13.74% and 0.05% to 15.40% respectively.

• The KSi index and KSi Home Index were up by 0.1% and 1.1% for the week at 3,751.71 and 8,150.35 respectively

International Market Summary

• US Fed have announced its latest monetary policy decision, and as expected the Fed kept interest rates unchanged and reduced its QE program by US$10b. This has help the market (Dow Jones, NASDAQ and S&P500) to reach another historical high level (see chart in the PDF attachment below).

• Alibaba, the Chinese e-commerce powerhouse has priced its initial public offering of stock at $68 per share, valuing the company $167.6b.

• Big dividend payers such as property trusts, banks and telecommunication stocks are likely to lose out as overseas investors make a hasty exit on the falling Australian dollar and higher bond yields. Experts are expecting a seismic reshuffle in the sharemarket as overseas traders pull money out of high yielding shares, which make up more than half of the top 200 listed companies.

• Gold decline by 0.4% to U$1,226.90 while Brent crude and Light Crude were up by 0.6% and 0.8% respectively to US$97.70 and US$92.99.

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

pdfKFM Weekly Investment Update: Friday, 19 September 2014

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