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KFM Weekly Investment Update: Friday, 24 June 2016

Local Market Summary:

• PM Peter O’Neill is expected to address the PNG Chamber of Mines and Petroleum conference in Sydney in December. The chamber’s manager for member services and projects Leah Warupi-Morlin told a radio station that the conference would display to investors the PNG resource sector

• The Coffee Industry Corporation has carried out a Productive Partnerships in Agriculture Project (PPAP). Project Manager, Mr Hombunaka said that the World Bank and the International Fund for Agriculture Development were financing the project and he urged farmers to put an honest effort to increase coffee production with quality so that farmers can get a better price

• Puma Energy has launched its first new liquid petroleum gas product – Pumagas – in Lae. Puma Energy LPG marketing manager Gabriel Laka launched the product at the Coronation Fuel Service Station in Lae. The upgraded LPG investments are aimed at expanding the domestic use of gas to reduce deforestation and the harmful effects of wood and kerosene burning

• Digicel will be hosting its first business solutions annual conference in Brisbane. Head of Digicel Pacific ICT Business Solutions Mr Cobain said the conference will provide a training platform for staff to increase their knowledge of business products and services to provide better solutions for its customers

• The construction of a 113 unit apartments project, Touaguba Hill Paradise, by NPL Development and valued at K90.0m, has commenced at Port Moresby. NPL Development MD Jimmy Poh said the company plans to build the project over a two year period and to hand it over to its clients by June 2018. The Touaguba Hill Paradise will comprise three apartment buildings with nine levels including basement parking

• The Cassowary Hotel in Kiunga, Western Province is set to open for business in January 2017. The 40-room hotel is the eighth major Trust investment project of the Community Mine Continuation Agreement (CMCA) communities. The Cassowary Hotel is a joint venture between CMCA Properties and the Steamships Trading Company, supervised by their property development arm, Pacific Palm Properties, and managed by their hospitality arm, Coral Sea Hotels

• PNG Air Ltd shareholders have been allowed to subscribe for five new shares in the company for each existing shares they hold. PNG Air Chairman Murray Woo in a market release advised that for each new share subscribed for shareholders would receive two options, exercisable as set out in the prospectus sent out

• The Bank of South Pacific under its First Home Ownership Scheme has funded more than 160 loans totalling K61.8 million for first home-buyers. The product was launched in 2014 as a joint initiative between the Government and the bank. Home loan manager Richard La’a said the majority of first home-buyers lived in Port Moresby

• Teachers Savings and Loans Society (TISA) chairman Gabriel Tai said plans by the board of Credit Corporation (CCP) to amend its constitution, particularly the clause relating to the age of director vacation of office, will not be supported by TISA. The amendment is one of the agenda items that the board will be seeking to solicit shareholders support when CCP convenes for its AGM on June 30

• This week’s BPNG auctions in Central Banks Bills were offered for 28day and 63day maturity with an under-subscription of K283.5m out of a total of K496.8m on offer. The weighted average yield was 1.1% and 2.4% respectively

• Auctions in Treasury Bills were oversubscribed by K172.5m from a total offer amount of K158.3m. Weighted average yields were 2.7% for 91 days, 4.7% for 182 days and 7.7% for 364 days

• The KSi closed 2.3% lower at 4,572.7 points mainly due to a drop in the share price of HIG (-25.0%) and NCM (-4.4%),the KSi Home Index dipped by 0.2% underpinned by the drop in share price of CCP (-1.2%) and CPL (-0.8%)

International Market Summary:

• Britain has voted to leave the EU in a popular revolt that will send shockwaves across Europe, with the sterling plunging 11.0% to a 30-year low and stock markets across the world suffering savage selling

• US stock-index futures fell more than 5.0%, as global equities slumped, suggesting the S&P 500 will drop by 5.1% to 2,012.0

• London listed equities are in line for sharp fall as futures for the FTSE 100 slide 8.3%, with banks expected to come under severe pressure and the FTSE 100 dropping by 7.4%. The Bank of England has said it will take “all necessary steps” to ensure monetary and financial stability in the wake of the Brexit vote. Rating agency S&P confirmed that the UK is likely to lose its final triple A credit rating

• Australian shares have ended a torrid day sharply lower with the ASX 200 losing 167.0 points, or 3.2%, to end at 5113.0

• Investors are piling into Treasuries, the anchor for the global financial system, with the yield on the 10-year note falling more than 20 basis points to 1.47%, its lowest level since 2010. UK gilts are expected to rise sharply in value as investors expect easing and additional liquidity from the Bank of England and other central banks

• Gold soared 6.3% to $1,335 an ounce, its most expensive in more than two years

• The price of Brent crude is down 5.3% to $48.22 a barrel and copper is off 3.2% to $4,620 a tonne

• IMF cut its forecast for US growth to 2.2% from its 2.4% in April for this year considering whether the economy can handle higher interest rates given the Fed’s very gradual path in raising its benchmark rate

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

pdfKFM Weekly Investment Update: Friday, 24 June 2016

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