New trend eyed for capital market

By SHIRLEY MAULUDU
THE Securities Exchange Commission has reviewed macroeconomic trends to develop and expand Papua New Guinea’s capital market, says executive chairman Christopher Hnanguie.
He said the commission had also made growth prospects by making a medium-to-long-term forecast.
“SEC-PNG has also looked at private sector growth and the interest rate forecasts,” Hnanguie said.
“SEC-PNG has also looked at the government’s policies and strategic statements including Vision 2050.
“The government’s intent to bring a comprehensive shift to the conduct of economic policy, and the changes we expect, including tax cuts, deregulation and fiscal stimulus, will create a new and higher trajectory for both economic growth and inflation.
“The sum of real economic growth and inflation equals nominal economic growth.
“Our central case focuses on the capital market implications of this positive inflection for nominal economic growth as a national and regional phenomenon.
“A higher trajectory for nominal economic growth should, in turn, bring about a normalisation of monetary policy.
“Because our central case may not come to pass, SEC-PNG has also considered alternative scenarios for robustness’ sake.”
Hnanguie said the SEC-PNG had presumed a departure from the “secular stagnation” conditions that had dominated PNG’s financial headlines for many years.
“SEC-PNG has identified two important deviations from our central case that helped to define alternative scenarios,” he said.
“SEC-PNG’s alternative scenarios contemplate a market where policy changes are in one case ineffective, and in the other, actually counterproductive.