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KFM Weekly Investment Update: Friday, 29 November 2013

Local Market Summary

• The Kina Securities Index (KSI) increased by 0.2% to 3,839.51 and the KSI Home Index decreased by 0.1% to 8,218.76 for the week.

• Nambawan Super Limited, CEO Mr Garry Tunstall, revealed that the fund is currently undergoing a revamping process with its operation, leadership capability and the entire infrastructure to drive the business forward, given the funds’ performance over the past five years. Mr Tunstall also identified government infrastructure projects as another significant potential investment for the fund.

• The National Government is focussing on saving its shares in Oil Search as well as all its State owned enterprises that was mortgaged in a A$1.5 billion loan deal with the Abu Dhabi fund (IPIC) to fund its equity in the PNG LNG project.

• The PNG Government passed a law on district authorities to strengthen the government at district level for more funding and resource allocation to the rural areas.

• Bank of PNG conducted a review on Savings and Loans Society Act due to challenges faced by the societies. Following the reform of the financial sector in 2000, the reduction in the number of Savings & Loans Societies stabilised increase in the total assets of the societies in June 2013.

• PNG Power signed a deal with Aggreko Generator Rentals of Australia to lease the 10MW power station for Port Moresby as these would increase PPL’s power generation capacity to meet the growing demands and lessen power outages in the nation’s capital.

• A report from the Asian Development Bank predicted that the climate change could overturn the Pacific Region’s development achievements if not addressed adequately. PNG is expected to be severely hit with GDP loses by up to 15.2%.

• The Investment Promotional Authority officially launched its online registry to improve efficiency and accessibility for businesses.

• Westpac PNG welcomes new PNG head, Mr Geoff Toone, with a range of extensive experience in the industry to lead Westpac PNG Team.

• Bank South Pacific Limited announced its appointment of Mr Ernest Brian Gangolf as a director of the Bank South Pacific Board this week.

• NBPO results for the third quarter ending 30 September 2013 continues to show challenges for the company. Despite this, the company is well positioned to capitalise on improving oil price environment with expectations of FFB and extraction rates normalising in 2014, CEO Nick Thompson commented. He also added that significant cost base reductions achieved through management initiatives and the circa 20% devaluation of the PNG Kina to date should further contribute to improved operating margins.

• The Bank of PNG will be hosting a two days Financial Inclusion Expo 2013 from the 6th – 7th December at the Sir John Guise Indoor Stadium in Port Moresby.

International Market Summary

• The recently negotiated interim Iran accord seeks to loosen some of the restrictions Iran faces when exporting crude oil in return for Iran opening up its nuclear proliferation program. Under the agreement, Iran can export roughly 1 million barrels per day, but given the fact that restrictions on shipping and finance remain, it will be difficult to increase oil sales enough to change global balances significantly. The focus is likely to shift to beginning negotiations for a permanent accord.

• The US stock market closed for the Thanksgiving holiday, thus most of the action in European stock markets focused on the UK Thursday. Sterling strengthened and shares in U.K. house builders dropped after the Bank of England said it would scale back its support for mortgage lending.

• The Australian Dollar Dipped below 92 US cents for the first time in two months after the Head of Reserve Bank’s intervention to cut the exchange rate.

• Gold prices continue to decline by 0.2% to $1,241.80 for the week.

• Oil closed 2.8% lower for the week to USD$92.14 per barrel following negotiation in Iran. Brent decreased 0.2% over the week to close at USD$110.83 per barrel (open PDF attachement below to see chart).

• The Kina appreciated against the AUD following a weakening in the Australian Dollar and appreciated against the USD during the week. The PGK finished the week at PGKUSD0.3873 and PGKAUD 0.4257.

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

pdfKFM Weekly Investment Update: Friday, 29 November 2013

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