KFM Weekly Investment Update: Friday, 21 March 2014

Local Market Summary

• Australian Prime Minister Tony Abbott is preparing to extend Australia’s agreement with PNG on processing asylum-seekers on Manus Island. The Australian Prime Minister signalled plans last night as he arrived in Port Moresby for a state visit to sign an economic treaty alongside the talks on people-smuggling. That was on the agenda today when Mr Abbott met his PNG counterpart, Peter O’Neill and cabinet ministers.

• Governor of the Bank of Papua New Guinea (BPNG) said that the economy has been doing well for the past 12 years in terms of economic growth, stable exchange rate and low inflation. The BPNG Board in its first quarterly meeting of the Bank also noted that despite high liquidity in the banking system, the kina exchange rate was stable, inflation was low and there was continued economic growth and also the future prospects was noted with good progress with PNG LNG with project plans for export of gas in the second half of 2014.

• The K3bn loan by the government of PNG to buy a stake in Oil search Limited has come under scrutiny of the National Research Institute of PNG (NRI) saying that the deal will have serious fiscal and ongoing repercussions for the country.

• Telikom PNG Ltd has invested K53m in a microwave transport system to support its rollout of the National Broadband Network (NBN). The project would create a Telikom fibre optic highway between Port Moresby and Lae where currently there is fibre optics between Madang and Lae.

• OK Tedi Mine reported 80% drop in Profit after Tax for the period ending 31 December 2013. In the interview with Global Business Reports, Managing Director Nigel Parker attributed the bad year to declining commodity prices which slump the gross revenue, breakdown in the aging mill production facilities, dry weather & low water level in the upstream Fly River impacting ship movement and the November typhoon that hit Philippines damaging OTML’s largest customer, Pasar.

• Indochine Mining Limited (IDC) suspended trading on POMSoX and ASX to, in the week until Thursday, to allow for capital raising

• City Pharmacy Limited (CPL) released its preliminary results this week. CPL’s Net Profit A9er Tax for 2013 was K16.4 million, decreasing 15.3% on the previous year. This was attributed to various factors including the launch of Eagle Boys in Q3 and Hardware Haus recording a loss due to poor management practices. Total Assets increased by 13.8% to K186.37 million, from K163.76 million in 2012 while CPL Group’s Net Assets increased to K115.29 million from K98.20 million in 2012. CPL announced a proposed dividend of K0.07 per share, and will be paid in equal tranches in May and August of 2014.

• PNG Kina slumped 5.5% for the week and 10.0% year to date as the PNG economy undergoes transformation creating downside and upside risk. (Refer to the graph in the PDF attachement below).

• The KSi Index closed the week flat on 3,612.67 while the KSi Home Index closed the week lower 0.6% at 7,944.83.

International Market Summary

• Australian markets edged higher today (Friday) following a he9y 1.12% slump on Thursday.

• European shares were mixed on Thursday as investors digested the US Federal Reserve decision and the latest encouraging US economic data. The FTSEurofirst 300 index rose by 0.1% with the UK FTSE down by 0.5% while the German Dax was higher by 0.2%. Mining shares were higher in London trade with BHP Billiton up by 0.8% and Rio Tinto rose by 0.4%.

• Major currencies were mixed against the greenback on Thursday in European and US trade compared with the close of Australasian trade. The Euro fell from near US$1.3845 to US$1.3775. The Aussie dollar was US90.35c at the US close. And the Japanese yen weakened from 102.19 yen per US dollar to JPY102.44.

• Base metal prices fell up to 3% on the London Metal Exchange on Thursday with nickel leading the declines while lead only lost 0.4%. The Comex gold futures price eased by US$10.80 an ounce or 0.8% to a monthly low of US$1,330.50 per ounce. Iron ore rose by 20c to US$110.70 a tonne.

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

pdfKFM Weekly Investment Update: Friday, 21 March 2014

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