KFM Weekly Investment Update: Friday,23 September 2016

Local Market Summary

• Papua New Guinea (PNG) together with seven other countries is embarking on a first of its kind international agreement under the World Trade Organisation to ban harmful fisheries subsidies. Supporting this agreement, Minister for Foreign Affairs and Immigration Hon. Rimbink Pato stated that this initiative will result in significant trade, economic, development and environmental benefits to help put PNG and Pacific Island countries on track in achieving target 14.6% of the UN Sustainable Development

• The Bank of Papua New Guinea (BPNG) announced plans to build a second Currency Distribution Facility (CDF) outside of Port Moresby, in Lae. BPNG Governor Loi M. Bakani said the decision to build in Lae was within its overall strategy of reaching the unbanked population of PNG. Further, the building will be built in line with international standards and is scheduled for completion in May 2018

• The National Fisheries Authority (NFA) has paid almost K30.0m in dividend to the National Government as stated by the Managing Director Mr John Kasu. He revealed that NFA makes a revenue of roughly K180.0m and part of that money is paid back to the government as dividend for the year

• Air Nuigini declared that it may be forced to withdraw its Sydney flights and downgrade the Brisbane flights narrow-body aircraft should the proposed codeshare arrangements with Qantas be rejected by Australian regulators

• Newcrest (NCM) has announced that it sold its 50.0% shareholding on the Hidden Valley Mining to Harmony Gold Mining Company (Harmony). Thus, Harmony now owns 100.0% on the Hidden Valley Mining. Sandeep Biswas, NCM Managing Director and CEO said NCM completed the strategic review of Hidden Valley and the best outcome was to exit the operation and focus its attention on other profitable assets it owns. However, the parties (NCM & Harmony) will remain joint venture partners in the Wafi-Golpu project

• In addition, NCM recently announced a dividend of A$0.1 (K0.2) for the period ending 30 June 2016 with payment expected on the 18 October 2016

• Niuminco Group (NIU) announced that the company would be offering eligible shareholders the opportunity to participate in a Share Purchase Plan (SPP). Under the SPP, holders of fully paid ordinary NIU shares on the share register at the record date of 15 September, with an address in Australia, New Zealand or Papua New Guinea are invited to purchase up to $15,000 worth of new shares (subject to a minimum application of $500) regardless of the number of NIU shares they currently hold.

• InterOil shareholders have finally accepted the transition with Exxon Mobil Corporation to acquire its assets. A special meeting was held recently while a convinced 80.0% of InterOil shareholders voted in favour of the proposed transaction. Chairman for InterOil Mr Chris Finlayson stressed by thanking its shareholders for their overwhelming support for this value creating transaction

• In addition, Mr Finalyson said that this transaction will deliver its shareholders a material and immediate premium or a potential direct cash payment based on the Elk-Antelope resource certification and exposure to future value through ownership
of ExxonMobil. The transaction is expected to close by the end of September 2016

• This week’s BPNG auctions in Central Banks Bills were offered for 28 days and 63 days with an under-subscription of K348.0m out of a total of K420.0m on offer. The weighted average yields were 1.16% and 2.36%

• This week’s BPNG auctions in Treasury Bills were offered for 182 days and 364 days with an under-subscription of K105.9m out of K122.7m on offer indicating weak appetite for the short term securities. Weighted average yields were 4.7% for 182 days and 7.7% for 364 days

• The KSi Index fell 0.4% for the week to close at 4,762.61 points underpinned by lower share price in Oil Search (-1.2%) while the KSi Home Index was up by 0.1% to end at 10,581.76 supported by an increase in Bank South Pacific up by 0.1% to end at K8.96

International Market Summary

• The United Stocks rallied with the Nasdaq Composite closing at a record, after the Federal Reserve opted to keep interest rates unchanged as it sought further evidence of economic strength

• European markets closed higher influenced by the US Fed keeping interest rates on hold, stock markets surged ahead

• Asian equities closed mostly higher on Friday, cheering from the prospect of the US Federal Reserve continuing accommodative monetary policy. Further, Investor sentiment also got a lift as the Bank of Japan strengthened its commitment to reviving inflation at a policy review

• The Australian share market has posted a third straight day of gains on for the week on the back of interest rates left unchanged by central banks to help stimulate economic growth

• PGK/USD remained unchanged for the week to end at 0.3155, PGK/AUD depreciated by 2.2% to close at 0.4130 caused by an increase in the AUD/USD up by 2.0% to close at 0.7640

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pdfKFM Weekly Investment Update: Friday, 23 September 2016

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