Kina hit by drop in share prices

STOCK exchange-listed investment company Kina Asset Management Ltd (KAML) has recorded an investment return of 2.2 per cent for the year ending Dec 31 last year.
The total value of the fund declined by K2 million, after payment of the 2017 full year and 2018 half-year dividends of K1.5 million and K1 million respectively.
KAML chairman, Sir Rabbie Namaliu, said challenging conditions in global investment markets reported earlier in the year had continued to year-end. Notwithstanding the recovery in early 2019, in view of the modest investment return, the board had determined not to pay a final dividend for 2018.
Sir Rabbie said that declines in international share prices resulted in capital losses of K2.7 million for the year.
In particular, he said capital losses on the fund’s Australian holdings in ANZ, National Australia and Westpac banks adds to K1.6 million, with share price falls of 14.9 per cent, 18.6 per cent and 20.1 per cent respectively. The only international stock to record positive returns was CSL, with a total return of 25.1 per cent.
Sir Rabbie said the fund’s cornerstone investment in BSP continued to perform strongly, with total returns of 22.2 per cent.
He said the fund’s other core domestic shareholding in Oil Search was affected by the Feb 2018 earthquake and returned -8.5 per cent for the year, but that company’s share price had recovered in early 2019 and more closely reflected its intrinsic value. The fund recorded currency losses of K2.1 million, resulting from the fall of the Australian Dollar of 6.1 per cent against the PNG Kina.
Notwithstanding, dividend and interest income rose strongly to K4.2 million. The key contributors to dividend income were BSP (K1.8 million) and the global equity funds, Vanguard and BlackRock International (K0.5 million).
Dividend income from the fund’s Australian equity holdings totalled K1 million. Commenting on asset allocation, Sir Rabbie said that at year-end, 40.2 per cent of the fund was invested in domestic stocks, cash and fixed income; and 59.8 per cent invested in international stocks and cash.
He said key domestic portfolio holdings (as a percentage of total funds) at year end were Bank South Pacific at 23.4 per cent, Oil Search at 5.7 per cent, with smaller holdings in Credit Corp at 3.7 per cent and Kina Securities at 3 per cent.