Business Advantage Papua New Guinea - - Features -

2013 was a mixed year for PNG stocks. The Kina Se­cu­ri­ties In­dex fell by 14.9% over the year, but was largely in­flu­enced by the mas­sive fall in value of the dual-listed Newcrest Min­ing, the largest com­pany on the Port Moresby Stock Ex­change (POMSOX). The Kina Se­cu­ri­ties Home In­dex, which ex­cludes over­seas stocks, fell only 2%. Do­minic Beange, In­vest­ment Fund Manager with Kina Funds Man­age­ment, says New Bri­tain Palm Oil shares had one of the most tur­bu­lent years on the ex­change. Its ma­jor share­holder, Malaysian com­pany Kulim, had hoped to in­crease its hold­ing from 50% to 70%. How­ever, the PNG Se­cu­ri­ties Com­mis­sion stepped in to block the pur­chase. The shares fell be­low both the of­fer price, and the pre-of­fer value, end­ing the year down 11.8%. ‘Truly do­mes­tic com­pa­nies had a pretty good year,’ Beange said, adding that the be­gin­ning of LNG pro­duc­tion in this year would most likely im­prove re­lated in­ter­na­tional stocks in 2014. Ge­off Ma­son, gen­eral manager of POMSOX, says the ex­change is hop­ing to fur­ther ex­pand its reach over the next 12 months. As well as en­cour­ag­ing new list­ings— Ni­u­minco Group and In­do­chine Min­ing—he is also hop­ing to see a wider range of in­vestors park­ing their funds with the ex­change in 2014. He says POMSOX is look­ing at do­mes­tic sources of cap­i­tal in par­tic­u­lar, with many lo­cal landowner and vil­lage groups look­ing to in­vest min­ing roy­al­ties and other com­mu­nity funds.

'It’s like hav­ing a whole lot of small in­vestor clubs around the coun­try. They can get a good re­turn by in­vest­ing their pooled funds into the mar­ket.’ In­ter­na­tional emerg­ing mar­ket funds are also be­ing tar­geted; with Ma­son say­ing the lower-priced kina is giv­ing in­ter­na­tional in­vestors a cheaper en­try into PNG stocks. ‘PNG is still a fron­tier mar­ket, pri­mar­ily for those who are pre­pared to step out­side the main­stream mar­kets. There is re­luc­tance among in­ter­na­tional in­vestors to in­vest due to an over-per­cep­tion of risk,’ says Richard Bo­rysiewicz, Group Gen­eral Manager at BSP Cap­i­tal. ‘How­ever, the huge amount of press Exxonmo­bil, Oil Search, and In­teroil are re­ceiv­ing is sharp­en­ing fo­cus on this mar­ket.’

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