KFM Weekly Investment Update: Friday, 23 February 2018

Local Market Summary:

• The PNG National Research Institute (PNG NRI) signed a Memorandum of
Understanding (MOU) with the Department of National Planning and Monitoring
(DNPM) in which PNG NRI will provide an independent review and forecast on
PNG’s economic performance. The review based on economic modelling will
assist to provide evidence-based policy formulation and professional
collaboration between both organisations.

• Lihir Mine is the third largest forex contributor in PNG under Newcrest Mining.
The Executive General Manager (EGM) for Newcrest Mining Ian Kemish said
according to figures in its foreign exchange fact sheet for 2017 confirmed the
company contributed US$396 million (K1.2 billion) to its national account.

• Investment Promotion Authority (IPA) has advised that they are undergoing major
reforms in the capital markets and the implications on new initiatives. Among
these reforms is the creation of the new Security Commission of PNG SECOM) ,
review of the previous business process with new and better focused regulations
and guidelines and SECOM developing regulations and guidelines for the Capital
Market, Takeovers Code, Corporate Governance Code, Licensing for Trustees
and Fund Managers.

• The board of Comrade Trustee Services has approved K8.5m for Toea Home
Housing Scheme for Defence Force. Commander Brigadier-General Gilbert
Toropo, said that a housing scheme for members of the Defence Force has finally
become a reality. The project was in its first phase of building 152 homes. The
first 30 homes are under construction and the owners are expected to receive
keys to their new homes by June.

• OSH also declared its final unfranked dividend of USD5.5 cents per share, taking
the 2017 total dividend to USD9.5 cents per share, nearly triple the 2016 full year
dividend of USD3.5 cents per share and representing a payout ratio of 48.0%.
The dividend goes ex on 06.03.18, record date is on 07.03.18 and payment date
is on 29.03.18.

• BSP has now become the fourth active licensed insurance company in PNG after
being presented with the Life Insurance License by Bank of PNG Deputy
Governor Mr Gae Kauzi early this week. BSP CEO Robin Fleming confirmed that
customers will now have mortgage consumer credit insurance, group term life
and an endowment product that will be beneficial for many Papua New Guineans.

• Papua New Guinea-based firm NPL Development Managing Director (MD)
Jimmy Poh said it will continue to invest in real estate in the country as the market
is healthy. MD said the firm’s second investment in a K90 million apartment called
Touaguba Hill Paradise was yet to be completed, however, 85 per cent of the
113 units had been sold. He said despite PNG current tough economic times is
not really having an effect as property market MD said. Market is healthy – that’s
why people are buying properties.

• This week’s BPNG auction result in Central Bank Bills offered for 28 days only
was over-subscribed by K105.50m out of the total amount of K327.00m on
offered. This indicates that there is an increase in appetite for shorter dated
securities. The weighted average yield for 28 days remained unchanged at 1.40%
from the previous auction week.

• This week’s BPNG auction results in Treasury Bills were over-subscribed by
K26.96m out of a total amount of K281.67m on offered. This indicates that there
is in increase in appetite for longer dated securities. Weighted average yields for
182 days, 273 days and 364 days remained unchanged at 4.72%, 6.76% and
8.04% respectively from the prior week.

• Both KSi Index and KSi Home Index decreased by 0.4% and 0.5% to close at
5,583.43 and 10,851.60 respectively. These were mainly underpinned by the
decrease in share price of BSP, CCP and OSH.

International Market Summary:

• The US Federal Reserve minutes this week indicate positive views with upward
revision of the US economic projections from ones made in the December

• Global stocks were generally lower in a shortened trading week in the US and
varied responses to a raft of results while US Fed Reserve minutes showing
confidence in an improving economic growth and in no rush to accelerate the
pace of tightening.

• US stocks struggled to recover by end of the week. The Dow Jones Industrial
index and S&P 500 were down 1.0% and NASDAQ was down 0.4% for the week.

• Australian shares extended last week’s gains and largely bucked global leads
with a raft of strong earnings updates in the busiest week of the February
reporting season. The S&P/ASX 200 was up 1.6% for the week.

• PGK/USD remained unchanged for the week to close at 0.3085 while PGK/AUD
appreciated by 1.9% to end at 0.3943. This was driven mainly by the crosscurrency
effect of the USD weakening against major currencies.

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

pdfKFM Weekly Investment Update: Friday, 23 of February 2018

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