Business Advantage Papua New Guinea
PNG’S CAPITAL MARKETS GET BOOST
PNG’S capital markets have been ripe for development for some time. Two new iniatives look set to create major progress in the coming year.
In late 2018, Pacific Capital Markets Development announced it had reached agreement to acquire Bank South
Pacific’s 62.5 per cent majority holding in the Port Moresby Stock Exchange (POMSOX).
The new deal puts the future of the exchange in the hands of two experienced capital markets specialists: Frank Dunphy (a former Chair of the POMSOX) and David Lawrence, former Chief Operating Officer of the Sydney Stock Exchange.
Dunphy tells Business Advantage PNG the new majority owners have significant plans to expand POMSOX, to allow it to trade government and corporate bonds, real estate investment trusts, and derivatives such as futures.
Dunphy also plans to acquire a leading edge ‘safe, secure and fast’ settlement system based on blockchain, and a new index for the PNG market is also on the cards.
‘We’re also keen to create a market on the issuance and trading of government debt.’
Following the successful launch of PNG’S first sovereign bond, the International Finance Corporation intends to issue a AAA bond as part of its efforts to deepen PNG’S financial markets. John Vivian, IFC’S Resident Representative for Papua New Guinea, tells Business Advantage PNG the IFC is looking at issuing bonds that are backed by its own balance sheet.
‘We’re aiming to introduce new instruments beyond governments that allow for the diversification of risk,’ he says. ‘IFC can also potentially act as an anchor investor for issuances of bonds by PNG corporates.’
Dunphy and Lawrence are also keen to support new funding sources for SMES.
‘Supporting capital raising and trading for SMES both fills the short-term gap between micro-finance and listing, and in the medium term provides a pipeline of companies for the growth of PNG’S listed market,’ notes Dunphy.
‘A vibrant national economy needs a well functioning and efficient equity and debt market,’ observes Lawrence.