KFM Weekly Investment Update: Friday, 24 August 2018

Local Market Summary:

● Public Enterprises and State Investments Minister Hon. William Duma made changes to Boards of State-owned entities, following approval from the National Executive Council. These involved the announcements of Sir Kostas Constantinou and Mr Ian Jepson as new Chairman and Director for Air Niugini, Mr Moses Maladina as Director for Kumul Consolidated Holdings, Mr Clement Kanau as Deputy Chairman, Messrs Frank Tokai and David Toua as Directors for PNG Post, and Mr Leo Meninga as Deputy Chairman for PNG Power

● PNG Investment Promotion Authority revealed new figures confirming Malaysia as the leading foreign investor in the country. This showed trades
amounting to US$420.0m (K1.4bn) between the two countries from January to June this year. Malaysia’s total exports to PNG is at US$280.1m (K927.0m) while Malaysia’s total import from PNG is at US$140.4m (K465.0m)

● Private sector firms were urged to act responsibly as the Foreign Exchange (FX) market improves, following concerns raised by Bank of Papua New
Guinea (BPNG) Governor Mr Loi Bakani. Mr Bakani said BPNG expects improvements from FX inflows as international commodity prices recover with the resumption of PNG LNG project following the highlands earthquake and final drawdown of US$190.0m(K629.0m) of the Credit Suisse Syndicate Loan in June 2018.This would continue to reduce imbalance and meet current import orders

● The US$5.4bn (K17.0bn) Wafi-Golpu Gold and Copper mine in Morobe Province will be developed jointly through the Wafi-Golpu joint venture by Newcrest (50.0%) and Harmony Gold (50.0%). With the mine set to operate for the next 33 years

● PNG Air’s Acting Chief Executive Officer, Mr Paul Abbot announced the appointment of Captain Emmanuel Kadiko to the role of Manager Flight Operations. Mr Abbot said, Captain Kadiko has vast experience of over 40 years’ in flying in the country’s challenging environment

● Newcrest Mining (NCM) released their financial results for the year ended 30 June 2018, from gold productions of 2.35m ounces report showed the
company’s statutory profit of US$202.0m and an underlying profit of US$459.0m. NCM Board decided on a final fully franked dividend of US$0.11
cents per share. Ex-dividend date is 29 August 2018 and payable on 5 October 2018

● Oil Search (OSH) released their 2018 half year financial results showing the company’s net profit after tax of US$79.2m (K258.3m), 39.0% lower than the first half of 2017. These results revealed the effect of the Highlands 7.5 magnitude earthquake in late February 2018. Despite this, OSH announced their 2018 interim unfranked dividend of US$0.02 cents per ordinary share, representing a payout ratio of 38.5%. Ex-dividend date is 4 September 2018 and payable on 25 September 2018

● Bank South Pacific (BSP) released their 2018 half year financial results showing the bank’s group consolidated net profit after tax of K418.3m, a
12.8% higher return than the first half of the prior year (2017). BSP further announced interim dividend payment of K0.36 per ordinary share. A payout ratio of 40.0%. Ex-dividend date is 3 October 2018 and payable on 19 October 2018

● This month’s BPNG auctions in Government Inscribed Stock was undersubscribed by K34.0m out of the total amount offered K100.0m. The weighted average yields for S15022021 was up by 0.02% to 9.54%, while S15052022, S15052025 and S15112028 remained unchanged at 10.48%, 11.54% and 12.58% respectively from the previous month

● This week’s BPNG auction in Central Bank Bills were over-subscribed by K71.5m out of the total amount offered K491.5m. The weighted average yield for 28 days and 63 days remain unchanged at 1.40% and 2.35% respectively from the previous week

● This week’s BPNG auction in Treasury Bills were over-subscribed by K74.8m out of the total amount offered K141.7m. The weighted average yields for 91 days decreased by 0.42% to 2.39% from the previous month while, 182 days, 273 days and 364 days remained unchanged from the previous auction at 4.73%, 6.76% and 8.04% respectively. There were no bids for 63 days.

● The KSi Index improved by 1.6% to close at 5,511.35 points attributed by the increase in share price of mining and exploration stock Newcrest Mining by 6.0% while the KSi Home Index remained unchanged to at 11,262.12 points

International Market Summary:

● US and Chinese officials ended two days of talk on Thursday with no major breakthrough as their trade war escalated with activation of another round of dueling tariffs on $16.0b worth of each country’s goods. Despite this the Dow Jones closed lower by 0.1% to end at 25,656.98 points while the S&P500 and NASDAQ both closed higher to end at 0.2% and 0.8% to end at 2,856.98 and 7,878.46 respectively

● Australian politics took centre stage in Friday’s trading session as the country’s Treasurer Scott Morrison was set to become the new prime minister
following the ousting of incumbent Malcolm Turnbull. The S&P/ASX 200 and S&P/ASX 50 both dipped by 1.5% and 2.2% to end at 6,247.30 and 6, 075.80 points respectively

● Asia markets mixed in closing on Friday as investors reacted to an escalating trade war between the US and China, a shakeup in leadership in Australia and inflation data from Japan. All major stocks ended higher for the week by 1.5%, 1.9% and 2.4% to 22,656.98, 27,728.01 and2,733.99 points respectively

KFM Weekly Investment Update: Friday, 10 of August 2018

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