KFM Weekly Investment Update: Thursday, 13 April 2017

Local Market Summary

• The Government’s plans for the Konebada Petroleum Park includes downstream processing for the petro-chemical industry using the PNG liquefied natural gas, an official said. Lands and Physical Planning director of impact projects Lazarus Malesa said the Konebada Petroleum Park Authority was mandated to manage land properly in the area so that development could supplement the two LNG projects

• The economy is mildly recoverying on the back of increased mining and agriculture sector outputs, according to the Asian Development Bank. This was reported in the recently released annual publication Asian Development Bank Outlook 2017. It notes PNG’s economic growth as at 2.0% in 2016, and expected to rise to 2.5% in 2017, and 2.8% by 2018

• PNG Power Staff Savings and Loan Society Limited recorded a profit of K1.6 million for 2016. This was announced by outgoing chairman Chris Bais during the society’s AGM. Mr Bais said it was a 16.0% increase from the net profit of K1.4 million in 2015. He also confirmed that a 5.0% additional interest will be paid into the accounts of all contributing members

• National Superannuation Fund chief executive officer Ian Tarutia announced that more than K110.0 million in contributions was received in the first quarter of 2017 which represents a 22.0% increase compared to the same period in 2016. Mr Tarutia said total contributions received was K117.5 million compared to K96.3 million received during the same period last year

• Puma Energy stopped unleaded petrol and zoom sales from all its facilities throughout the country. The company has more than 50 retail sites in PNG, both branded and independent, as well as 11 storage coastal terminals, 11 airports and a storage capacity of more than 480,000 metres cubed. Puma Energy released a statement yesterday advising all its customers about the
decision to stop the sales due to operational requirements

• Agricultural produce from PNG is in high demand in Guangdong and other provinces in China, according to PNG Chamber of Commerce and Industry president John Leahy. Mr Leahy said this allowed for downstream processing opportunities to be established in the country to cater for the demand. They are really looking for agricultural products and also looking at opportunities to do on shore processing in the source country of the product

• Cocoa Board of PNG will build nurseries in New Ireland following an agreement with the Kavieng District Development Authority. The agreement was signed by Cocoa Board CEO Boto Gaupu and Kavieng MP Ben Micah. Mr Gaupu said the district nursery project came under its special projects division to address seeds and seedling supplies and to ensure the availability of planting materials that can withstand the cocoa pod borer

• Ramu nickel/cobalt mine in Madang province exceeded production targets for the March quarter, benefiting from rising global cobalt prices, an official says. Highlands Pacific one of the joint venture partners in Ramu, said the mine had achieved total production of 7884 tonnes of nickel in concentrate and 755 tonnes of cobalt in concentrate in the three months to March

• This week’s BPNG auctions in Central Banks Bills was offered for 28 days with an over-subscription of K130.0m out of a total of K120.0m on offer. The weighted average yield was 1.21% up from 1.20% from the previous week

• This week’s BPNG auctions in Treasury Bills were over-subscribed by K145.6m out of a total of K159.9m on offer. Weighted average yields for 28 days, 91 days, 182 days and 364 days were 1.26%, 2.55%, 4.73% and 7.82% respectively

• The KSi Index rose 2.3% to close at 5,587.41 points. Likewise, the KSi Home Index climbed 0.4% to conclude the week at 11,050.7 points, reflecting an increase in share price of BSP and OSH by 0.4% and 0.7% respectively

International Market Summary

• The S&P financial sector fell on Wednesday and turned negative for the year, in the latest indication that one of the strongest trades of the postelection rally is undoing. The sector lost 0.9% on Wednesday

• China’s exports and trade surplus increased more than expected in March on improved global demand, underpinning expectations that next week’s read on growth in the first quarter will show steady economic momentum

• The S&P/ASX 200 rose 0.3%to 5929.3, while the broader All Ordinaries Index added 0.3 % to 5964.6

• Investors were still watching developments from Russia, where U.S. Secretary of State Rex Tillerson was expected to push for the country to abandon its support for Syrian President Bashar al-Assad. Mr. Tillerson was meeting directly with Russian President Vladimir Putin on Wednesday

• The Australian dollar declined against the US dollar as mounting geopolitical tension drove investors out of riskier assets. The Australian dollar hit lows in the US session at $0.7476, but recovered some ground to trade at 07491

• UK stocks closed lower on Wednesday, erasing earlier gains as miners joined supermarket shares in negative territory and as geopolitical risks persisted

• PGK/USD remained flat for the week to close at 0.3145, PGK/AUD depreciated by 0.6% to end at 0.4142, while AUD/USD appreciated by 0.6% to end the week at 0.7593

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