Prime Minister Peter O’Neill says a planned ‘shake up’ of the Port Moresby Stock Exchange (POMSoX) will lead to more innovation and increased domestic and international investment.

PNG Prime Minister, Peter O’Neill

The National Executive Council has approved legislation to alter the ownership of the exchange, and the make-up of the POMSoX board, opening it up to competition.

POMSoX, one of only two bourses in the Pacific (the other is the South Pacific Stock Exchange in Fiji), was established in 1998 with two stockbrokers, Kina Securities (part of the Kina Group) and BSP Capital (part of BSP). Today, they remain the only two licensed stockbrokers on the exchange.

BSP Capital, the Bank of PNG and Kina Securities are co-owners of Port Moresby Stock Exchange Limited, the private company that owns and runs the exchange.

Capital market

While Papua New Guinea’s banking and non-banking financial institutions have grown significantly since the financial sector reforms of 2000, PNG’s capital market has not grown as had been anticipated, O’Neill added.

There are currently 18 companies listed on POMSoX, which is weighted toward mineral stocks, several of which are dual or compliance listings.

However, the exchange has struggled to attract new listings in recent years, while it has recently lost two notable stocks, New Britain Palm Oil Limited (de-listed by new owners) and Indochine Mining (under administration). Trading in a third company, Airlines PNG, is currently suspended.

O’Neill said legislation will see changes to the ownership structure and board composition of POMSOX, which ‘will bring greater transparency and accountability in the way the exchange is operated’.

POMSOX currently has a market capitalisation of over K60 billion, but less than K1 billion has been circulating within the market in the past 17 years, he said.

‘The national government cannot allow the Port Moresby Stock Exchange to remain a closed market, owned by only two stockbrokers who control the stock market and its activities,’ he said.

‘There are many qualified Papua New Guineans and foreigners in the country who are able to provide competitive broking services and we will open the market to competition.’

New products

In recent years, a number of initiatives have been mooted to encourage a more vibrant capital market in PNG, including a secondary bond market, more relaxed listing rules on POMSoX to encourage new listings, and greater connectivity between POMSoX and international markets to encourage more foreign investment in PNG stocks.

O’Neill said the government would encourage companies to introduce new products to the market, including investment funds, unit trust funds, debentures and other capital market or financial products.

The activities of POMSoX are regulated by the Securities Commission of PNG, a department of PNG’s Investment Promotion Authority, which in turn falls under the Department of Trade, Commerce and Industry.