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KFM Weekly Investment Update: Friday, 31 July 2015

Local Market Summary:

•The Government has passed the Sovereign Wealth Fund (SWF) Bill in Parliament this
week that will allow all revenues from mineral and petroleum resources to be saved
for future generations. The SWF Bill was passed with a two-thirds absolute majority
of 76-4 votes. According to the proposed scheme, a certain percentage of dedicated
revenues will be deposited into SWF to be a cushion against world commodity prices

•The Motukea Port has officially been opened and will replace the Port Moresby Port
once developed to full capacity. The acquisition of the new Port was facilitated by
the Independent Public Business Corpora on through a loan agreement with the
Bank of South Pacific for the K800.0m loan for the acquisition of the land and the
relocation of the port form Fairfax harbor to Motukea

•Hon Ben Micah, Minister for Public Enterprise and State Investment, revealed in the
parliament this week, that ‘PNG Power (PPL) is broke and is in deep cash flow shortage’.
He further admitted that PPL is on the verge of collapse with an overdrawn
bank account of K40.0m last year. A detailed financial report, detailing this matter, is
expected to be issued shortly

•Prime Minister, Hon Peter O’Neill, noted in the parliament this week that the drop in
global price for base metals (copper and gold) has significantly affected the revenues
derived from Ok Tedi. In addition, continuous dry season in the region of its operations negatively affects the company

•Kina Securities (KSL) officially listed on the Australian Stock Exchange and the Port
Moresby Stock Exchange this week following the successful completion of its Initial
Public Offering (IPO). KSL CEO Mr Yates said it was satisfying to reach the end of an
IPO with a quality register of investors. Mr Yates added that investors have been
attracted by KSL’ strong growth potential that will follow the acquisition of Maybank
PNG

•Kina Asset Management (KAM) announced on the 30/06/15 the payment of dividend
of 2 toea. The dividend will be paid on 07/08/15. KAM announced this week that
their Dividend Reinvestment Price will be 98 toea per share after taking account of a
discount of 2.5%

•Government (DoT) has not continued issuing Treasury bills this week for shorter
dated maturities as it did the previous week with 63 and 91 day terms. Only 182 and
364 day terms was offered for an auction amount of K250.0m. The weighted average
yields results were 4.57% and 7.35% for 182 and 364 days, respectively

•Kina Securities index ended the week marginally higher at 3,485.7, a 0.8% increase
while the Home Index closed lower at 9,711.1, a weekly decrease of 0.2%

International Market Summary:

•US gross domes c product growth in the second quarter was 2.3%, lower than the
consensus 2.6% forecast. The dollar backed off from a one-week high against a basket
of currencies on Friday, but was still seen on firm footing after US GDP data supported
the case for the Federal Reserve to raise interest rates later this year

•European equities ending month on positive note. US index futures and European
equities are ending the month on a cautiously positive note, absorbing a move towards multi-year highs for
short-term US bond yields and shrugging off more losses for China’s stock market

•Chinese stocks wrap up worst month in 6 years, as the government struggles to rekindle investor interest amid a
US$3.5 trillion rout. The Shanghai Composite Index slid 1.1% to 3,663.7 at the close, dragged down by energy and
industrial (see graph)

•ASX200 close at 5,693.5, a 2.3% weekly increase. Producer prices rose at a faster rate
year-on-year in the second quarter when compared to the first, but their overall level
s ill leaves the country’s central bank plenty of scope to ease further

•Oil prices fell in Asian trade on Friday as concern over global oversupply intensified
after the head of OPEC indicated that there would be no cut-back in production

•PGK/USD and PGK/AUD ended the week lower by 0.3% to 0.3605 and 0.5% to
0.4939, respectively

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

pdfKFM Weekly Investment Update: Friday, 31 July 2015

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