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KFM Weekly Investment Update: Friday, 28 July 2017

Local Market Summary:

•PNG is ranked fourth in the Pacific region in regards to the implementation of the
United Nation’s trade facilitation measures which enhance trade. The region is
ranked last in the world according to the UN Economic and Social Commission for
Asia and the Pacific economic affairs officer Sangwon Lim. Lim said improvements
were needed such as the progress towards paperless trade processes by
government agencies

•Businesses in the country have identified four priority areas which if improved will
positively impact growth. PNG Business Council executive director Douveri Henao
said the areas were the provision of infrastructure and basic services, government
and regulation, broadening the industry base, and productivity and employment.
Those are the four priority areas that businesses would like to see have a strong
presence in the political accords

•The Association of Superannuation Funds of Papua New Guinea (ASFPNG) has
been revived after eight years of absence as the peak body of the superannuation
industry in the country. Its membership constituted of the major approved
superannuation funds (ASF), outsourced fund administrators, investment managers
and professional advisors. At a special general meeting new executives were
elected to the ASFPNG board. The executives are president – Ian Tarutia,
(NASFUND) vice president – Vere Arava, (Nambawan Super), treasurer – John
Auna (Comrade Trustee Services Ltd) and secretary – Chris Hagan (Aon Master
Trust)

•Lihir gold mine contributed significantly to Newcrest Mining’s (NCM) second quarter
results. NCM’s MD Sandeep Biswas in releasing the firm’s results said the milling
amount rate at Lihir had been 14.5m tonnes per annum. Gold production in the June
quarter was up 20.3% due to the higher head grade, partially offset by lower
recovery rates. Lihir’s All In Sustaining Cost (AISC) decreased $20.0 per ounce to
$802.0 for the June quarter, Mr Biswas said

•City Pharmacy (CPL) received K10.0m fire insurance settlement from Pacific MMI
(PMMI) today. CPL Chairman, Mahesh Patel said that the insurance claim will assist
with replenishing stock, especially medical supplies that was lost in the fire that
gutted their storage warehouse in June this year. The settlement was paid after an
independent assessment of the insurance claim was deemed to be valid. PMMI
CEO, Angus Maciver said that other payments will be made later on once a full
scope of damage incurred has been completed

•PNG Microfinance’s Boroko branch in Port Moresby lent out more than K750,000
to village-based projects under the National Fisheries Authority (NFA) credit
scheme partnership, said branch manager Mr Rex Noga. Mr Noga said the initiative
by NFA began in 2015 to deliver small to medium enterprise lines of credit to village-based
fishermen and fish-farmers. The scheme is to assist people in the informal
sector to improve their productivity and generate income

•This week’s BPNG auctions in Central Bank Bills were offered for 28 days with an
over-subscription of K4.5m of the total amount of K340.0m offered, a continue
increase in appetite for shorter dated securities compared to last week. The
weighted average yield was 1.36%

•This week’s BPNG auctions in Treasury Bills were under-subscribed by K0.2m out
of a total amount of K160.84m on offer demonstrating consecutive decline in
appetite for longer dated securities. Weighted average yields for terms 182, 273 and
364 days were 4.74%,6.68% and 7.96% respectively

•The KSi Index increased from the previous week at 1.0% to end at 5,043.44 due to
positive movement in OSH share price. While KSi Home Index remained
unchanged to close at 11,156.28 points

International Market Summary:

•The US Federal Reserve left interest rates unchanged in their meeting this week
with no indication of the likelihood of another rate increase this year. The Fed
however did confirm that they plan to start reducing their fixed income assets
relatively soon

•The US dollar was down against major currencies after the Federal Reserve
revealed in their policy statement this week that they were in no hurry to raise
interest rates. The Australian dollar and Euro were up 1.5% and 2.0% respectively
for the week

•Iron ore has surged in recent weeks to top $US70 a tonne on sustained demand
from China, the largest user. This is supported by increased in share prices of
Fortescue Metals, BHP Billiton and Rio Tinto on Australian Stock Exchange market
for the week

•Stronger-than-expected inventory draw in the US and pledges by leading producers
in the Middle East that they would cut supplies to the global market in earnest
boosted oil prices to rise this week to eight-week high. Both Light Crude and Brent
Crude prices closed last night at US$49.04 and US$51.49 per barrels a day
compared to last week Friday’s closing prices of US$46.40 and US$48.84

•Brent crude prices soared 7.1% for the week supported by drop in oil inventories
and efforts by OPEC to cut production in light of persistent global oil glut

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

pdfKFM Weekly Investment Update: Friday, 28th July 2017

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