Capital Markets
From The Report: Papua New Guinea 2015
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Of all the subsectors within Papua New Guinea’s financial system, the capital markets are the least mature. The banks are strong, growing and becoming increasingly competitive; the insurance sector has been active for more than a century and is substantial for a developing country; and the superannuation funds are large, stable and vital to PNG society. On the other hand, the stock market has only two brokers, two owners, 18 securities and little liquidity. The lack of capital markets development has not gone unnoticed, and the exchange has been targeted for major upgrades, while the reform of the debt market is being discussed. These efforts have support at the highest levels, with Prime Minister Peter O’Neill backing the transformation of the stock exchange.

This chapter contains a viewpoint from Syd Yates, CEO, Kina Securities; and an interview with Richard Borysiewicz, General Manager, BSP Capital.

Articles from this Chapter

Overview

PNG prepares to restructure its exchange to encourage competition
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Of all the sub-sectors within Papua New Guinea’s financial system, the capital markets are the least mature. The banks are strong, growing and becoming increasingly competitive. The insurance sector has been active for more than a century and is substantial for a developing country. The superannuation funds are large, stable and vital to PNG society. On the other hand, the stock market has only two brokers, two owners (the brokers themselves), 18 securities and little liquidity. The lack of capital…

Interview

Richard Borysiewicz, General Manager, BSP Capital: Interview
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Interview:Richard Borysiewicz What is your assessment of the current business environment in Papua New Guinea? RICHARD BORYSIEWICZ: The first six months of the year have been tough compared to 2014, and the shortage of hard currency is perhaps one of the major stumbling blocks in the economy, as it hinders the overall growth potential. It is increasingly difficult for businesses to buy products and equipment internationally and the shortage of liquidity has had a negative effect. The windfall…

Viewpoint

Syd Yates, CEO, Kina Securities: Viewpoint
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Viewpoint: Syd Yates Promoting PNG as an investment destination on the international market has not always been an easy task, given the poor reputation that the country has been suffering from for at least the last two decades. However, when you look at the facts more thoroughly and look at what an investor should base his decision upon, PNG is in fact a success story. Despite the many challenges we have faced since independence, we have not missed a single loan payment or had a government been…

Analysis

The government focuses on developing PNG’s debt markets
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Although the Port Moresby Stock Exchange ( POMSox) has been capable of offering debt instruments for some time, the debt market is largely undeveloped in Papua New Guinea. The government’s local-currency issues are illiquid, it has not yet issued an international bond and there is currently only one corporate debt instrument on the POMSoX. There is little available beyond primary issue government bills and bonds that must be held to maturity. However, the market is starting to evolve, and it looks…

Analysis

Highlands Pacific: Mining
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The Company Highlands Pacific is a PNG incorporated and registered mining and exploration company listed on the Australian Securities Exchange and on the Port Moresby Stock Exchange. Highlands’ major assets are interests in the producing $2.1bn Ramu nickel cobalt mine and the Frieda River copper-gold project, with exploration in progress in the Star Mountains. Highlands also has an exploration tenement on Normanby Island (Sewa Bay). Highlands has achieved a major turnaround in earnings, reporting a profit of $7.6m for 2014, compared with a prior year loss of $37.2m in 2013. The profit included a $15m impairment reversal for the company’s…

Analysis

Highlands Pacific: Mining
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The Company Highlands Pacific is a PNG incorporated and registered mining and exploration company listed on the Australian Securities Exchange and on the Port Moresby Stock Exchange. Highlands’ major assets are interests in the producing $2.1bn Ramu nickel cobalt mine and the Frieda River copper-gold project, with exploration in progress in the Star Mountains. Highlands also has an exploration tenement on Normanby Island (Sewa Bay). Highlands has achieved a major turnaround in earnings, reporting a profit of $7.6m for 2014, compared with a prior year loss of $37.2m in 2013. The profit included a $15m impairment reversal for the company’s…

Analysis

InterOil: Oil and gas
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The Company InterOil is an independent oil and gas business that is primarily focused on Papua New Guinea. InterOil has exploration licences covering almost 16,000 sq km, with this divided into four petroleum prospecting licences (PPLs) and two petroleum retention licences. Each PPL is currently held for six years, from March 2014. Most of the licences spread over the Eastern Papuan Basin. In the last several years, InterOil has focused on improving its exploration programmes in the hopes of developing a robust oil and energy business. It has made five consecutive discoveries, which include Elk, Antelope, Triceratops, Raptor and Bobcat. InterOil…

Analysis

Bank South Pacific: Finance
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The Company Bank South Pacific (BSP) is the leading bank of the South Pacific, holding the largest branch network in Papua New Guinea with over 60 branches throughout the country including its operations in Fiji and Solomon Islands. BSP has total assets valued at PGK15.9bn ($6bn), equivalent to around one-third of PNG’s total 2013 GDP estimate. The bank’s customer loan and receivables portfolio grew from PGK1.51bn ($571.4m) to PGK6.8bn ($2.6bn) over 2014. In PNG, BSP’s lending market share increased from 47% to 52% over the same period, while customer deposits grew to PGK12.7bn ($4.8bn), up PGK507.4m ($192m). At year-end 2014, BSP’s…

Analysis

Oil Search: Oil and gas
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The Company Oil Search (OSH) is engaged in oil and gas exploration in Papua New Guinea, as well as in Yemen, Iraq and Tunisia. OSH’s key projects in PNG include the PNG liquefied natural gas (LNG) project, three oil projects (Greater Moran, Gobe and SE Menanda), and the Hides gas-to-electricity (GTE) development. OSH was incorporated in 1929 and is headquartered in Sydney, Australia. OSH’s profit was up 72% in 2014 to $353.2m, representing the highest profit in the company’s 86-year history. This was attributed to the first contribution from the PNG LNG project. Net profit after tax included a $129.6m after-tax impairment charge, largely…