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KFM Weekly Investment Update: Friday, 27 April 2018

Local Market Summary:

● Prime Minister (PM) Hon. Peter O’Neill told the Commonwealth leaders in the
investment conference held in London, that PNG would launch its first Eurobond
this year. This was underpinned by PNG LNG production that would be fully
restored by May this year from the recovery of higher energy prices and
liquefied natural gas production to pre- earthquake levels ease strains on its
public finance. PM O’Neill also said that PNG’s total debt stood at 30.0% which
two-thirds were domestic debt

● The Department of Treasury has published a press release in response to
Standard & Poors (S&P) Global rating for PNG down from ‘B+’ to ‘B’. The
Secretary for Treasury Mr Dairi Vele stated that the downgrade was unfortunate
as the Rating Agency based its assessment on outdated information. He said
the 2017 fiscal deficit was positive with K1.79b lower than Supplementary
Budget projection of K1.88b which was also lower than the 2016 deficit of
K3.09m. The S&P Global Ratings stated that it will raise the ratings if it believes
the government will restructure its spending to be in line with the revenue. Mr
Vere said the Government in its Medium term plan has strategies for positive
outcomes in the next twelve months to achieve a positive rating

● Chairman of APEC Business Advisory Council (ABAC), Mr David Toua has
called to minimize barriers in trade and investment within member countries. He
made the statement while attending the ABAC meeting in Tokyo. He said a
strong message has been delivered to Trade Ministers to press forward for a
‘Free Trade Area of the Asia Pacific’. ABAC have prepared recommendations
to promote growth which will be presented in the upcoming APEC Ministers
Responsible for Trade meeting next month

● The Chief Executive Officer (CEO) for Kina Securities, Mr Greg Pawson told
business leaders in Port Moresby that its banking division, Kina Bank is working
with the Australian government and other donors as a joint venture to set up a
discrete capital fund for small and medium size business as part of the bank’s
corporate social responsibility. Mr Pawson outlined the bank’s five development
priorities for the year which includes developing partnership and digital banking
products, observing corporate responsibilities, and improving branding and staff
training. He further said that the bank would also help the Bank of Papua New
Guinea with its financial inclusion plans possibly through a micro finance
company

● PNG Air’s (CGA) Board of Directors announced that Mr Muralee Siva has
resigned from his position as the CEO. Chairman of the Board Mr Murray Woo
expressed his gratitude towards Mr Siva’s 5 years of service with CGA and
stated that Mr Siva believes that with the rebranding and initial stage of the refleeting
program successfully completed, it is time for him to move on and allow
someone with a new perspective and a different set of ideas to come in and
take CGA through the next stage of its development. The CEO position is
pending appointment and CGA’s Chief Commercial Officer Mr Paul Abbot will
be acting CEO

● Two listed companies in the finance sector released their Annual General
Meeting (AGM) notice for shareholders this week. Bank South Pacific (BSP) will
be holding their AGM at Crown Plaza Hotel in late May. Kina Securities Limited
(KSL) chairman, Isikeli Taureka announced that the KSL AGM will be held at
Grand Papua Hotel in late May as well.

● This week’s BPNG overall auction results in Central Bank Bills were oversubscribed
by K40.50m of the total amount offered K476.50m. The weighted
average yield was unchanged for the 28 days term at 1.40%

● This week’s BPNG overall auction results in Treasury Bills were oversubscribed
by K103.96m of the total amount offered K159.01m. The weighted
average yields remained unchanged for 182 days, 273 days and 364 days were
4.72%, 6.76% and 8.04% respectively

● Both KSi Index and KSi Home Index were down for the week. The main index,
KSi dropped 0.4% to 5,177.08 and the Home index KSHi dropped by 0.1% to
11,047.03 mainly due drop in prices for Credit Corp (CCP) and Oil Search
(OSH)

International Market Summary:

● As global markets wait on US GDP growth result for the first quarter, analysts
maintain the view that growth may have been slow but the situation could be
temporary. Slow growth in the first quarter would be due to decline in consumer
spending which dropped sharply but it is believed that the setback will not hold
as the year progresses in light of improving labour market and fiscal stimulus.

● US stocks closed lower while long term bond yields rose for the week as
markets remain anxious about the US growth results for the first quarter this
year. Dow Jones Industrial was down 0.6%, S&P 500 was down 0.1% and the
NASDAQ was down 0.4% for the week

● European stocks were mixed this week with the FTSE 100 up 0.7%, the German
DAX was down 0.3% and the CAC 40 was up 0.8% for the week

● Asian stocks were also mixed as US stocks dropped over the week and while
there was a lot of optimism as leaders of the North and South Korea met for the
first time in over a decade.

pdf KFM Weekly Investment Update: Friday, 27 of April 2018

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