KFM Weekly Investment Update: Friday, 25 November 2017

Local Market Summary

• The Chinese Government gave K20.0m to the Government to maintain the International Convention Centre (ICC) which will be used for the 2018 APEC Summit. The funds will assist ICC project in Port Moresby that was built by the Chinese Government. PNG APEC Minister Justin Tkatchenko said the K20.0m would be put towards maintaining the centre to standard because China President Xi Jinping is coming for the Summit

• Chairman of The Rural Industries Council Sir Brown Bai, raised concerns to the PNG Government to consider developing agriculture to where it represents 50.0% of the total Gross Domestic Product. Sir Bai added during the opening day of the inaugural national agriculture summit that agriculture can be a key player for the economy but not everybody is participating in active productivity. He continued saying that despite the realities of not controlling global prices, we can control what we do by having production in sustainable areas like agriculture

• The CEO of PNG Cocoa Board Mr Boto Gaupu aims to generate more than K700.0m in annual revenue from cocoa subsector in the next five years. The developmental aspects of this cash crop are similar to enhance partnership with rural farmers. Mr Gaupu said the Cocoa Board in partnerships with the districts, farmer groupings, cooperatives and Indigenous Landowner Group’s to deliver services reliably to increase productivity and the level of quality

• The National Statistics Office has published their Consumer Price Index (CPI) report for September quarter 2017. According to the report, CPI inflation for the 12 months leading to September is at 5.1% and 1.0% for the quarter. Key contributors to this quarter’s inflation include meat products such as curried chicken (7.8%), pork (7.6%) and beef (5.0%), batteries (5.9%), mens shoes (5.2%), sugar (5.2%)

• For the CPI towns, Alotau-Kimbe-Rabaul group recorded the highest CPI inflation for the quarter at 1.2% followed by Port Moresby and Lae at 1.0% and Goroka-Hagen-Madang group at 0.6%. On a rolling 12 months basis, Lae is leading with a 12-month inflation of 6.4% followed by Port Moresby with 5.3% then Goroka-Hagen-Madang and Alotau-Kimbe-Rabaul both at 4.3%.

• BPNG’s overall auction results in Government Inscribed Stock auction for the month of November was under-subscribed by K12.3m out of the amount on offer of K63.8m across all security series. The respected weighted average yields for the respective series were 9.48% for 2021, 11.53% for 2025 and 12.77% for 2028

• This week’s BPNG auction results in Central Bank Bills offered for the 28 day term was under-subscribed by K10.0m out of total amount of K357.5m offered indicating a decrease in appetite for shorter dated securities. The weighted average yield for the only term, 28 days remained unchanged at 1.40% from the previous week

• This week’s BPNG auction results in Treasury Bills were over-subscribed by K14.0m out of a total amount of K156.1m on offer. Weighted average yields for 182 days and 273 days remained unchanged at 4.73% and 6.76% respectively while 364 days increased to 8.03% up by .02% all from the previous week

• The KSi Index and KSi Home Index both increased from the previous week at 0.1% and 0.4% to end at 5,292.95 and 11,086.92 points reflecting positive share price movement of BSP and OSH

International Market Summary

• The US Federal Reserve released the minutes from their latest meeting indicating caution regarding continued weak inflationary data sparking uncertainty around chances of a rate hikes in the next year. This caused the US dollar to drop against major currencies

• Chinese stocks posted their worst loss late this week as investors remain concerned about the new government’s approach in managing the Chinese bond market and also with the US markets closed for Thanksgiving, there was little guidance available. The Shanghai Composite was down by 0.8 % for the week

• PGK/USD remained unchanged for the week to close at 0.3115 while PGK/AUD depreciated by 1.2% to end at 0.4066. This was driven mainly by the cross-currency effect of the USD weakening against major currencies

• The AUD/USD was up 0.7% to 0.7625 while EUR/USD and GBP/USD appreciated 0.4% to 1.1854. and 0.4% to 1.3292 respectively following the weakened dollar after the US Fed released the minutes from the meeting sparking uncertainty about future rate hikes

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pdfKFM Weekly Investment Update: Friday, 25th of November 2017

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