Brokers bullish on PNG

stock market plan

PNG is taking the first steps towards the establishment of a stock exchange in Port Moresby.

The idea, first mooted publicly by former finance minister Philip Bouraga last September, is now approaching reality.

Mr Bouraga said the then government of Michael Somare was examining the possibility of a stock market in order to help raise local share capital, in crease national ownership of businesses, improve the capital structure of companies and re duce government spending.

In the past, he said, large projects involving overseas in vestors or smaller foreign-own ed companies had received assistance in the forms of gov ernment equity, subsidised loan funds or guarantees at enor mous cost to the government.

The g6vemment has not made any public move since then.

However, several financial institutions have taken the bull by the horns and gone ahead with trading in shares in public companies.

Kina Securities, a Port Moresby-based company with Australian stockbroker links, has launched a daily newspaper column quoting the “market” prices.

It lists ANZ, Burns Philp, Bank of South Pacific, Credit Corporation, Arawa Enter prises, Bougainville Deve lopment Corporation, Indosuez Bank, Kumul Kopi, Farmset, New Guinea Islands Produce, Post-Courier, South Pacific Holdings and Westpac.

Previously, share trading took place informally, and usually by unwilling company secretaries. But the sharehol ders often had no real idea of the market value of their hol dings.

Kina Securities managing director Rory Allen said: “In the absence of a formal market, they are often unable to know if they are selling at fair market value.”

His company, he said, is helping to correct that. It also

plans to list further public com panies for daily trading.

In the past six months, two Australian stockbroking firms have set up offices in Port Moresby offering to trade in Australian-listed shares.

They are Brisbane brokers Josephson, Wright and Co, operating through PNG Invest ment and Securities Pty Ltd, and Mullens and Co of Sydney and Melbourne, offering trade through Kina Securities.

The moves involving Sydney

broker Rene Rivkin to set up an investment bank through the takeover of Madang-based (though Australian listed) plantation company Dylup by Oilmet Resources has also cre ated much interest.

The minerals exploration boom has provided another incentive for people in PNG who want to purchase shares in locally prospecting companies.

Easier share dealing, it is thought, will also assist com panies in finding share capital at

a time of government spending reductions and tight bank liquidity.

There have been frequent cases of the National Invest ment Authority the body which vets new business applications advising foreign enterprises to find more local equity. But the owners have complained of difficulty in discovering PNG entities with available cash to invest.

Now they have a market to

turn to.

Tim Sinclair.