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KFM Weekly Investment Update: Friday, 31 October 2014

Local Market Summary

• Papua New Guinea’s (PNG) National Executive Council (NEC) endorsed the establishment of a PNG Sovereign Wealth Fund (SWF). The NEC approved the engagement of an external law firm by the Department of Treasury to assist the SWF Secretaries Committee prepare secondary legislation, significant amendment to existing legislations and regulations and procedures necessary to allow the SWF to operate fully.

• The state signed an agreement worth K725m with Curtin Bros PNG Ltd (Curtin Bros) for the relocation of the Port Moresby main wharf to Curtain Bros’s Motuke facility outside Port Moresby. This agreement followed the signing of the sales agreement between PNG Ports Corporation Ltd and Curtin Bros on Tuesday (28/10/14). Minister for Public Enterprise and State Investments Minister Hon Ben Micah mentioned that the move in the wharf‘s location will allow the smooth transformation of the city’s (CBD). He further stated that the relocation of the port will relieve the traffic congestion in the national capital’s CBD.

• The new Lae port overseas extension has been officially open and commissioned to begin operation. The wharf will be the hub of trading activity for the Pacific, as well as Australia and New Zealand as it can cater for large ships.

• Housing and Urban Development Minister Hon Paul Isikiel stated in his recent appearance on the Tanim Graun program on EMTV that accommodation rentals in PNG’s urban centres of Port Moresby and Lae have soared as result of the lack of available land for housing development. He pointed out that 97.0% of land in PNG was Customary and 3.0% was owned by state. This was a major impediment in the housing development in PNG.

• The PNG government’s plan to merge Air Nuigini with other regional airlines was announced by the minister for Public Enterprises and State Investments, Ben Micah. The government aims to create a platform to either merge or go into takeover arrangements with some of the smaller airlines in the Solomon Islands, Vanuatu and Fiji to facilitate a bigger carrier for Melanesian countries.

• City Pharmacy (CPL) profit forecast for the full year 2014 is expected to be lower by 50.0%, compared to the previous year 2013. According to POMSOX release, CPL Board attributed the nine months performance to losses by Hardware Haus, Paradise Cinema business and the cut back of sale to the LNG project sites as construction phase further winds down.

• There were no Treasury Bills on offer in this week. The week’s BPNG Central Bank Bill auction was undersubscribed by K250.7m with a total of K409.0m bids successful. The weighted average yield was 4.5% for 182 days.

• The PGK appreciated against the AUD by 0.2% to 0.4509 cents.

• The KSi index declined by 0.3% to 3,800.94 while KSi Home Index gained 7.4% to end the week at 9,893.07 mainly attributed to the increase in New Britain Palm Oil.

International Market Summary

• ASX 200 was up 0.26% for the week, led by ANZ bank, Macquarie and Commonwealth Bank. Refer to graph showing the run made by ASX200 and ANZ bank.

• The US quantitative easing (QE) stimulus programme that began in 2008 is coming to an end, the US Federal Reserve (Fed) announced. The Fed said it was confident the US economic recovery would continue, despite a global economic slowdown.

• Japanese stocks soared, with the Nikkei 225 Stock Average (NKY) closing at a seven-year high, as the Bank of Japan unexpectedly boosted easing and the nation’s pension fund prepared to unveil new asset allocations.

• Russia agreed to terms for restoring natural-gas exports to Ukraine, laying the groundwork to prevent residents going without heat as temperatures drop.

• Gold headed for another consecutive loss in 2014 as Federal Reserve ended its asset purchase program amid signs of improvement in the US economy.

• West Texas Intermediate and Brent price headed for the biggest decline in two years amid signs that Oil cartel OPEC boosted output for the to a 14- months high despite crude slumping into a bear market.

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

pdfKFM Weekly Investment Update: Friday, 31 October 2014

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