Papua New Guinea investors enjoyed substantial returns in both the fixed-interest and equities asset classes last year, according to an exclusive analysis for Business Advantage PNG by JMP Securities Managing Director Lars Mortensen.

BSP’s Waigani branch. Credit: BAI

Papua New Guinea’s capital markets produced excellent returns for investors in both the fixed-interest and equities asset classes in 2024, despite the significant macroeconomic headwinds experienced by the PNG economy.

The aggregate market value of the core domestic listed companies on PNG’s National Stock Exchange (PNGX) – excluding Santos Limited (STO) and Newmont Corporation (NEM) – increased a whopping K3.75 billion over the year. This represented a valuation increase of 41.27 per cent for the year. The total value of these domestic listed stocks has now reached K12.8 billion.

A strong year for PGX-listed companies

When we add Santos and Newmont to the assessment, the total value of all of the companies listed on PNGX increases to a total of K246 billion. However, Newmont’s market cap in particular is very large (K169 billion) and has a very modest number of securities in circulation on the local market, so analysts tend to exclude the company from most market statistics.

In terms of total returns (share price growth plus dividends received during the year), the standout winner for 2024 was Kina Asset Management Limited (KAML) which recorded total returns to shareholders of 100%.

Total shareholder returns in 2024

All of the staple securities except City Pharmacy Limited (CPL) did very well during the year.

Market leader BSP Financial Group delivered shareholder returns of K7.71 per share (56.28 per cent) during the year – an incredible performance.

NGIP Agmark (NGP), Credit Corporation PNG Limited (CCP), Kina Securities Limited (KSL) and Steamships Trading Company Limited (SST) all delivered returns greater than 35 per cent during the year.

While dividend yields remained very strong on PNGX, it was increases in share prices that drove the lion’s share of the total returns for most of the stocks.

Fixed-interest markets

Fixed-interest markets saw dramatic increases in short-term interest rates during the year, with 364-day Treasury Bill rates finishing the year on 8.66 per cent. This represented an increase of 5.55 per cent from the lowest yield achieved during the year of 3.11 per cent in March 2024.

Market interest rates increased pretty much every single week in 2024 from late February until the end of the year.

Activity in the Government Inscribed Stock Market for the year was far more subdued, with the 10-year rates ending the year just shy of 10 per cent. The resulting PNG yield curve is incredibly flat, with the spread between 1-year and 10-year interest rates being a mere 1.35 per cent. This is a consequence of the very subdued levels of activity in the market for longer-dated securities.

364-day Treasury Bill rates in 2024

Looking to 2025

In terms of the prospects for trading in 2025, the market is cautiously optimistic. Investors need to be realistic about the challenges involved in achieving back-to-back stellar returns and we expect share price increases to moderate somewhat during the coming year. However, with a number of stocks delivering high-single-digit dividend yields, even a 10 per cent increase in valuations will take total returns to close to 20 per cent for the year. With the potential for some positive news on the economic front during the year, this sounds like a realistic target.

Other hoped-for market developments include the potential for additional listings during the year, with several potential initial public offerings (IPOs) being mooted.

Lars Mortensen is co-founder and Managing Director of JMP Securities Limited, a leading securities trading and investment banking advisory firm in Papua New Guinea and one of PNG’s two licenced stockbrokers.