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KFM Weekly Investment Update: Friday, 28 October 2016

Local Market Summary

• PNG will host its first ever Petroleum and Energy Summit in 2017. The summit will be organised by the CWC Group, an international conference and training company with extensive experience at hosting government led oil and gas summits
and LNG conference across the globe. The Group will be bringing their international expertise to PNG and creating a platform which will enable PNG to market their extensive hydrocarbon reserves and energy related opportunities to the world for the first time on an open platform

• The Mineral Resources Authority said the alluvial gold production and revenue levels since 2014 have been affected by the fluctuating gold prices on the world market. However because the gold price increased substantially earlier in the year to an average US$1,340.0 (K4,153.3) an ounce, and remained stable at that price for almost six months, the revenue side is holding against last year’s figures of K356.3m

• Mr Peter Graham has been appointed as an independent director and the chairman of Kumul Minerals Holdings Limited (formally Petromin PNG Holdings Limited). Mr Graham was the managing director of OK Tedi Mining Limited and also the Managing director of ExxonMobil PNG. The immediate focus of Kumul Minerals will be to consolidate the State’s mining interests to build a strong foundation. to enable Kumul Mineral to position itself to take up the State’s equity in the emerging world class projects, particularly Frida River and Wafi Golpu projects

• Mr Wapu Sonk of Kumul Petroleum Holding Limited said the Kroton equity for shareholders has been extended to December 31, 2016, to allow for a discounted price. Mr Sonk also said that under the UBSA the State granted to these beneficiaries a commercial option to buy a 25.7% of the shares in Kroton No 2 Limited, the special purpose company that held the State’s 16.7% interest in the PNG LNG Project

• Newcrest (NCM) MD and CEO, Sandeep Biswas announced that the company achieved a 3.0% increase in production and a 15.0% increase in AISC margin during the quarter despite planned total plant shutdowns at Lihir and Telfer and lower grade at Lihir. Mr Biswas also said during the September quarter, NCM and Harmony submitted an application to the PNG Government for a Special Mining Lease for the Wafi-Golpu project. Separately, NCM sold its 50.0% interest in the Hidden Valley mine to Harmony which enables them to focus their attention on their other assets

• Credit Corporation Ltd (CCP) chairman Sir Wilson Kamit announced that Mr Torquill Bowen is the new CEO of CCP replacing Robert Allport who had retired after serving the company since 1987. Sir Wilson said Mr Bowen has more than 10 years’ experience working in various capacities in the country and would bring a strong background in the finance industry as well as experience in property development and leasing

• This week’s BPNG auctions in Central Banks Bills were offered for 28, 63 and 91 days compared to the previous week’s auctions which offered only 28 & 63 days. The amount on offer increased by K107.0m to K510.0m with an under-subscription of K122.0m. The weighted average yields for the 28 & 63 days remained unchanged while the weighted average yield for the 91 days was 2.51%

• Auctions in Treasury Bills were offered for 28, 63, 182 and 364 days and were under-subscribed by K58.9m out of K187.0m on offer compared to the previous week’s results which were also under-subscribed by K71.1m out of K249.9m on offer. Weighted average yields were 1.22%, 2.40%, 4.72% and 7.72% respectively

• The KSi Index declined by 0.5% to close the week at 4,786.78 points and the KSi Home Index also dropped by 0.2% to end at 10,629.25

International Market Summary

• UK’s GDP was estimated to have increased by 0.5% in Quarter 3 2016 compared with growth of 0.7% in Quarter 2 2016. This was the first release of GDP covering a full quarter of data following the EU referendum. The highlight was from strong performance of the services industries offsetting falls in other industrial groups

• Government bond yields surged to new highs as positive news out of UK and increased expectations of rate hike in December prompted sell off in bonds this week. The US 10Y bond yield increased to 1.86% on Thursday while UK 10Y bond yield increased to 1.3% when the national statistics office in UK announced positive GDP growth of 0.5% in Q3 supporting views of its stability post Brexit

• Gains in Randstad, Orange and major mining companies lifted shares in the European region as European shares rose on Thursday. The mining companies share prices were boosted by an increase in copper prices

• Asian shares dropped as anxious investors in Japan waited on earnings results from major companies and investors’ sentiments in China soured on slowing industrial profit growth, persistent yuan weakness, and growing concerns over tighter liquidity

• The Australian share market retreated for the second straight day this week in light of the declines in the share prices of energy, resources, consumer staples and financial sectors. The energy sector was weaker because of a drop in oil prices overnight on fears the recent OPEC deal to freeze oil production could unravel

• PGK/USD remained unchanged for the week to end at .3155, while PGK/AUD increased by 0.7% to end the week at .4159

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

pdfKFM Weekly Investment Update: Friday, 28 October 2016

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