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KFM Weekly Investment Update: Friday, 20 January 2017

Local Market Summary

• Mining Minister Hon. Byron Chan received five revised Memorandum of Agreements (MoA) for Hidden Valley, Tolukuma, Ok Tedi, Simberi and Sinivit including a new one for Woodlark from the Mineral Resources Authority’s (MRA) Managing Director Mr Philip
Samar. Hon. Chan was pleased and complimented MRA and those involved for delivering six MoAs over a period of only two years

• MRA MD Mr Samar stated that there needs to be an improvement on how mining projects MoA is administered and MRA proposed that an open and transparent process be built into these respective MoAs. He stressed that this will then enable each MoA to
be self-administered which an independent party is involved under the respective MoA to conduct an annual audit of how each of the parties performed as stated in the MoA and made available publicly

• CEO for Nasfund Mr Ian Tarutia stated that the fund has done a remarkable job despite the economy facing challenges by processing 74,000 member transactions paying over a total net of K437.5m in entitlements. The membership has also grown by 5.0% to 537,000 which is another great achievement considering the high unemployment trend in the private sector. He also added that this year the fund is reviewing its investment portfolio and asset allocation strategy to improve cash returns

• In addition, Nasfund announced the appointment of four new executives to its management team whom are Mr Seema Das-Raju as Chief Risk and Compliance Officer, Mr Vincent Lialu as Head of Human Capital, Mr Charlie Gilichibi as Chief Officer member services and Mr Allen Sayers as Project Manager Funds Management transition

• According to the PNG Cocoa Board, the domestic price of cocoa continues to drop since last year. Relating to its recent publication the average price in the previous month was K5, 897.0 per tonne which decreased by 12.3% from K6, 621.0 in the former month. CEO Mr Boto Gaupu stressed that the global price also dropped by 14.0% in the last two months as a result of an abundant supply in the two top cocoa producing countries that are Ivory Coast and Ghana

• As previously announced on December 15, 2016, InterOil (IOC) and ExxonMobil have entered into an Amended and Restated Arrangement Agreement. Following receipt of the unanimous recommendation of an independent Transaction Committee (“the Committee”) of the IOC Board of Directors, unanimously recommended that IOC shareholders vote for the proposed transaction with ExxonMobil

• Moreover, IOC announced that is has filed and began mailing a management information circular (the Circular”) in relation to the proposed transaction with ExxonMobil. There will be a special meeting scheduled on February 14, 2017 in New York City for IOC holders of common shares, options and restricted share units are to vote on the proposed transaction with ExxonMobil. If the requisite approval of IOC’s security holders is obtained, IOC will seek court approval of the transaction

• Meanwhile, IOC’s executive director in PNG Mr Isikeli Taureka has continued to update the Independent Consumer and Competition Commission (ICCC) with additional information to assist in its assessment of the company’s acquisition by ExxonMobil. ICCC’s CEO Mr Paulus Ain complimented IOC’s transparent conduct of complying with the provisions of the ICCC Act. This constant corporation and assistance provided by IOC and its partners through their senior officials had benefited the ICCC assessments of the proposed acquisition

• This week’s BPNG auction in Central Bank Bills was only offered for 28 days with an under-subscription of K292.0m out of a total of K300.0m on offer. The weighted average yield was 1.15%

• This week’s BPNG auctions in Treasury Bills were under-subscribed by K180.37m out of the K293.97m on offer. Weighted average yields were 2.56% for 91 days, 4.72% for 182 days and 7.79% for 364 days

• The KSi Index closed 1.1% lower at 4,762.09 points underpinned by a drop to a drop in share price of NCM while the KSi Home Index remained unchanged to close at 10,628.44 points

International Market Summary

• US markets were lower on Thursday ahead of Donald Trump’s inauguration as president on Friday morning. The Dow Jones slipped 0.8% to end at 19,732.40 points, S&P 500 was down 0.5% to end at 2,263.69 points and the NASDAQ was down 0.6% to end at 5,540.00 points

• The world’s second-largest economy, China, has shown strong signs of recovery with better-than-expected GDP data released by the National Bureau of Statistics. China’s economy grew by 6.8% in the fourth quarter of 2016 and 6.7% for the full year 2016 fuelled fiscal stimulus, debt and low interest rates. Although, growth was the slowest growth in 26 years but in line with the government’s forecasts

• Despite data from China, markets in Asia were mixed in cautious trading ahead of Trump’s inauguration. Tokyo’s Nikkei was down 0.8% to end at 19,137.91 points while Hang Seng was up 0.1% to end at 22,965.06 points and Shanghai was up 0.4% to end at 3,123.86 points

• The Australian share market has closed lower as investors remain cautious ahead of Donald Trump’s swearing-in as US president. The benchmark S&P/ASX200 was down 37.40 points, or 0.66 per cent, at 5,654.80 points at 1615 AEDT, while the broader All Ordinaries index was down 35.70 points, or 0.62 per cent, at 5,709.70 points

• Oil price continues to hold above US$50.0 a barrel supported by Opec and nations including Russia agreed late last year to trim supply by 1.8 million barrels a day to reduce bloated global inventories

• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD decreased by 1.1% for the week to end at 0.4164, while AUD/USD appreciated by 1.1% to end the week at 0.7566

 

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pdfKFM Weekly Investment Update: Friday, 20 January 2017

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