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May 17, 2021

Good morning and welcome to this week’s JMP Report.

Last week we saw BSP, OSH, KSL, KAM, NCM and CCP trade. 

BSP traded 328,087 shares unchanged at K12.00, OSH traded 3,382 shares at K10.50, KSL traded 7,005 shares down 1t to K3.20, KAM traded 5,000 shares at K0.90, NCM had 521 shares also traded unchanged at 75.00 while  saw 1,445 CCP shares trade also unchanged at K1.70. Refer details below;

 


WEEKLY MARKET REPORT 10.05.21 – 14.05.21

STOCK

QUANTITY

CLOSING 

CHANGE

% CHANGE

BSP

328,087

 12.00

 

KSL

7,005

 3.20

-0.01 

OSH

3,382

10.5

 

KAM

5,000

 0.90

 

NCM

521

 75.00

 

CCP

1,445

 1.70

 

CPL

 0.60

 

Last week we saw CPL announce their AGM and I have attached a copy for your information.

CPL Notice of Annual General Meeting

 

We are coming into reporting season, standby for dividend announcements.

On the interest rate front we saw the 364 day TBill average again at 7.20% which was undersubscribed by K36mill.

Last week we saw the Bank of PNG announce the next Treasury Bond issue which was sent out to our readers, rather than clog up your inbox, please contact me if you require another copy.

What is evident is BPNG  are wanting to get the long end yields down by offering small parcels of 10yr with an 11.50% coupon, a full 1% lower than last month. You may remember Aprils issue was increased from 50 mill to 150mill, accepting an oversubscription in the 10yr.

I believe the best value in this auction is still the 2yr and 3yr if you are not wanting to hold stock in the long end. But if you are prepared to hold the 10yr, investing above 11.50% provides a good income stream.

More info here



What we have been reading this week

South Korea to spend $40 billion on world’s biggest floating wind farm

James Fernyhough

Just three months after the South Korean government announced it was building the world’s biggest offshore wind farm, it has now announced a new ambition: to build the world’s largest floating offshore wind farm.

According to reports in Hong Kong newspaper The South China Morning Post, the new wind farm will cost $US32 billion ($A40 billion) with a generation capacity of 6 gigawatts. That’s about three times the capacity of Australia’s largest coal plants.

It adds to the 8 gigawatts of wind capacity announced in February. While that wind farm is planned for South Korea’s south west coast, the latest project will be off the coast of the industrial city of Ulsan in the south east of the country.

President Moon Jae-in said the project would be funded by a mixture of public and private finance. He said it would generate enough electricity to power 5.7 million homes and reduce annual greenhouse gas emissions by 9 million tonnes a year.

“Sea winds are like carbonless petroleum in the 21st century. Large scale offshore wind farms will bring us a short cut to achieve carbon neutral and provide us with new growth engines,” the SCMP quoted Moon as saying.

Floating offshore wind remains by far the rarest and most expensive form of wind power. However, recent projects including the Hywind project off the coast of Scotland and the Wind float project off the coast of Portugal show it can be done. A recent report in academic journal Nature Energy predicts floating solar could make up a quarter of all offshore developments by 2035.

While traditional fixed-bottom offshore wind turbines rely on relatively shallow water – up to 50 or 60 metres – floating wind has no such limitations, massively opening up potential sites. It also means they can be built beyond the horizon from the shore, reducing the risk of complaints.

The massive announcement is further evidence the South Korean government is serious about meeting its goal of net zero by 2050, part of a Green New Deal that also promises to phase out coal and build 16 gigawatts of new wind capacity.

At US President Joe Biden’s leaders climate summit last month, President Moon Jae-in also announced his country would end all funding of overseas coal projects – a big move as South Korea has until now been a lifeline for coal mining companies that couldn’t secure funding or insurance in other markets.

But despite South Korea’s promises, the country remains extremely dependent on coal and gas. Renewables generated just 5 per cent of the country’s electricity in 2019, with wind and solar contributing less than 3 per cent. Its carbon emissions continue to rise, and are currently more than two and a half times what they were in 1990.

 


Back to the Future: Resuming the Long-Term Agenda for Business

By Martin Reeves and Kevin Whitaker

For most business leaders, the past year has been defined by a laser focus on navigating the COVID-19 crisis. The coming months will certainly provide more pandemic-related challenges, but as vaccinations progress and economies recover, the critical issues and timeframes of business will broaden.

What are the key challenges that will drive the longer-term change agenda? We would highlight three pivotal themes that will drive many others emanating from enterprises, business ecosystems, and the natural ecosystem. First, the pandemic has illuminated the need to build resilience. There will be more unexpected shocks in the future, and our research suggests that resilience is also valuable beyond crisis periods. Leading companies will codify and institutionalize lessons from recent experience. Second, the shift to new distribution and working models has accelerated the digital transformation agenda and raised the associated competitive stakes. And third, climate change will come into even greater focus. Though emissions growth was temporarily reversed during the pandemic, it will resume as economic activity recovers. However, the crisis has also given new reason for optimism by demonstrating our capacity for investment and mobilization against common challenges.

In order to succeed in 2021 and beyond, leaders across sectors and regions must pursue these themes by adopting three related imperatives: build resilience systematically, digitize for advantage, and address the bottlenecks to effective climate action.

  1. Build Resilience Systematically

COVID-19 has made clear the value of resilience in business, and leaders around the world have spent the past year making efforts to minimize disruption. But the resilience agenda is not finished now that we are past the most acute phase of the crisis—it needs to be a continuing priority. Resilience is not only about mitigating stress but also about adapting to and thriving in new circumstances.

The resilience agenda is not finished now that we are past the most acute phase of the crisis.

Resilience is a strategic concern for businesses. Crises are about survival, but they are also about seizing an opportunity to gain advantage. For example, in China (which experienced the shock and recovery cycle first), the spread in performance between leading and lagging companies was nearly twice as wide as it was in the preceding year. That pattern was not an aberration; our research shows that the gap between winners and losers consistently increases during crises.

It is not surprising, then, that resilience has a significant impact on long-term success. Though industry crises happen infrequently, they have a disproportionate effect on long-term competitive advantage: two-thirds of companies that outperformed their industries over the past 25 years were outperformers during crises.

Yet even though some companies have been more resilient than others, few have codified a playbook for how to systematize and replicate this capacity. A significant opportunity awaits companies that embed resilience thinking, systems, and behaviours to thrive amid any potential disruption. The study of long-lived natural and social systems reveals six traits that businesses can apply to be generally resilient:

  • Prudence—developing early warning signals to detect potential threats and preparing for plausible downside scenarios
  • Redundancy—building buffers for critical supplies or capacities to limit the potential impact of a shock
  • Diversity—having a variety of capabilities or products that respond differently when a crisis occurs
  • Modularity—separating components of the business so a failure in one part does not cascade to the whole
  • Adaptability—having the ability to rapidly adjust to new circumstances by experimenting, identifying appropriate responses, and amplifying them throughout the organization
  • Embeddedness—aligning the business’s goals with those of partners and communities, which makes external cooperation and support more likely during a crisis

For example, Airbnb’s resilience enabled it to recover faster from the COVID-19 shock than its peers. Like most travel and lodging businesses, Airbnb was severely hurt by the crisis initially, seeing its bookings fall by nearly 80%. However, whereas traditional hotel chains offered large buildings in city centres, Airbnb had a diversity of rental options—including more spacious or secluded offerings that rose in demand while traditional tourist locations fell. Additionally, the company adapted rapidly to the new circumstances, launching new campaigns to raise awareness of an expanded array of remote offerings and adopting new safety precautions. As a result, it recovered more than half of its lost business by the end of 2020, well ahead of many peers.

Building resilient businesses will require a new mindset for many leaders. Instead of focusing exclusively on maximizing efficiency, resilience involves building new capabilities that may come at a short-term cost. And instead of managing short-term shifts in performance, resilience requires a focus on consistent long-term value creation and a balancing of short-run efficiency against long-run effectiveness.

  1. Digitize for Advantage

Before the pandemic, digital technology was a primary driver of growth. Financial markets were increasingly dominated by technology companies, and organizations across all industries were engaged in efforts to digitize. COVID-19 massively accelerated the digital agenda; e-commerce adoption sped up and many companies announced permanent remote work policies, among other shifts. In the Fortune Future 50, our ranking of public companies with the greatest capacity for sustained long-term growth, more than half of the world’s top firms are in technology industries, and tech capabilities are a key factor in other industries as well.

However, digital transformations are by no means straightforward—most such efforts fail. One trap is to confuse efficiency or new functionality with competitive advantage, leading companies to digitize and streamline existing processes without taking opportunities to revamp the business model. Another trap is to separate insight and action; cutting-edge data and analytics systems can add only limited value if they are not connected to decision making. Yet another trap is to focus on digitizing only the internal workings of the company, eschewing opportunities to tap into external capabilities.

Many digital transformations fail because companies confuse efficiency or new functionality with competitive advantage.

Underpinning many of these pathologies is the fact that the advantage created by any particular product or business model is shorter-lived today. Companies therefore need to pursue dynamic advantage, based on continuously learning, adapting, collaborating, and shaping environments. A transformative digital agenda should therefore pursue capabilities to achieve those goals. This involves using sensors and non-traditional data sources to expand the organization’s powers of perception; applying AI to expand the organization’s powers of cognition; connecting data and AI systems to autonomous decision engines that can expand an organization’s capacity for adaptation; and leveraging digital platforms to enhance powers of collaboration through digital ecosystems.

For example, the Chinese insurer Ping An was founded in 1988 as a traditional insurance company, but it recently transformed to become a digital leader. The company created a wide variety of digital services to build customer relationships and generate data; it invested heavily in AI; it connected customer databases throughout the business with AI systems and decision platforms; and it formed collaborations, such as a digital joint venture with Alibaba and Tencent, to enhance its capabilities further. These capabilities helped it become the world’s most highly valued insurance company.

As companies digitize, it is just as important to refocus human cognition on areas that will create synergies with technology. While AI can find patterns in data at massive speed and scale, humans remain distinctly advantaged at diagnosing underlying causes (for example, decoding the impact of long-term trends) and imagining new possibilities (for example, creating brand-new offerings to serve new customer needs). Humans also have a unique role to play in innovating the governance and ethical models for an algorithmic age. And humans alone can articulate the social purpose and ethical values of an organization. By combining human and machine capabilities synergistically, leaders can create new types of organizations that advantageously combine the powers of machine and human cognition.

  1. Address the Bottlenecks to Effective Climate Action

Climate change is already affecting companies and societies, and if not urgently addressed, it threatens to undermine the broader economic, social, and political systems upon which business depends. It is now widely agreed not only that societies need to take action but also that businesses have an important role—they are large, powerful actors; they span national boundaries; they are good at making change happen; and they can counterbalance the limited ability that governments in many regions have to act.

Indeed, many companies have announced commitments to address climate change. Yet the numbers say the scope and speed of pledges are insufficient to match the urgency of the problem—outcomes are still headed in the wrong direction. To overcome the bottlenecks to prompt, sufficient action, leaders need to take several important steps to escalate efforts.

Increase ambition and urgency. Greater commitments and faster progress will be required to sufficiently address the challenge of climate change. This is likely to involve increasing the scope of businesses’ efforts—decarbonizing not only their own organizations but working to reduce emissions across their full supply chains and ecosystems. And it will involve moving beyond reporting and transparency, putting greater focus on actions that can be taken to solve the problem.

See constraints as opportunities. If climate action is conceived as a necessary burden, that tends to promote a mindset of incrementalism and minimum viable action. But emissions reduction is not just a burden—it will also present opportunities for the businesses that solve problems first. This might manifest in a reduction of long-term risk, such as the negative impacts of climate regulation or the possibility that existing assets lose viability. It could also manifest in more immediate value creation in the new markets for lower-carbon products and technologies that are now emerging. Framing the climate challenge as an opportunity can unleash creativity for bolder, more imaginative solutions.

Reimagine business models. Sustainability is still often treated separately from core business strategy, and it often assumes the status quo business model—but taking sufficient action will require integrating sustainability and strategy. To do so, leaders need to apply “sustainable business model innovation,” which aims to reimagine business models to co-optimize for business and societal benefits. This involves testing the sustainability limits of the existing business model as it scales; applying modular innovations to address the identified bottlenecks; linking those innovations to business advantage; and scaling solutions across the business and beyond.

Shape the landscape. Leaders can wield influence beyond their own organizations to shape the business context in ways that accelerate progress. This might involve supporting or encouraging legislation that shifts the playing field in favour of climate action. It might involve creating new sources of information, such as improved reporting standards, to better align beliefs about the scale of the problem and the progress made against it. And it may include innovation in capital markets to create global signals and pricing mechanisms that can guide resource allocation.

Foster collective action. Climate change is often framed as a “prisoners’ dilemma” in which individual actors cannot coordinate effectively. But this is not necessarily the case—bottom-up collective action can transform the game into one that can be addressed cooperatively. Coalitions of companies can create conditions that incentivize action, such as by instituting industry standards or regulation, or by signalling that there will be critical demand for solutions. Seven of the ten largest companies in the world leverage vast, global, digital ecosystems, but the governance agenda of these new structures is still ill-defined. Rather than waiting for a seemingly inevitable restriction of the power and influence of the largest ecosystems, leaders can pre-emptively seize the initiative to deploy these new structures toward collective action on our biggest common problems.

For example, Walmart’s Project Gigaton initiative aims to avoid a billion metric tons of greenhouse gas emissions by reducing energy use among its suppliers and partners. The company did not impose specific standards but instead encouraged partners to set specific and achievable emission reduction goals and established forums for convening smaller suppliers.

As the post-COVID world emerges, leaders will need to shift their attention back to longer-term challenges. By building resilience, digitizing for advantage, and supporting collective action on climate change, leaders can put their businesses in position to succeed in and help shape the new reality.

The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit our Latest Thinking page and follow us on LinkedIn and Twitter.

Authors

Martin Reeves

Managing Director & Senior Partner, Chairman of the BCG Henderson Institute

San Francisco – Bay Area

Kevin Whitaker

Head of Strategic Analytics of the BCG Henderson Institute

New York

 


E-waste recycling matter of national security: report

by Kelly MacNamara

eWaste

According to the United Nations more than 50 million tonnes of electronic waste was discarded in 2019

Recovering precious elements from e-waste is a security imperative for Europe that should be written into law, according to a report Monday that said it was “crucial” to ensure industry competitiveness and sustain tech-dependent lifestyles in the region.

Circuit boards, magnets in disk drives and electric vehicles, batteries and fluorescent lamps are among items containing critical raw materials—including gold, silver and cobalt—that could be recycled and reused, the research found.

This would safeguard supplies for consumer electronics and even the defence industry, said the consortium behind the European Union funded CEWASTE report, which said the fate of these materials was a “societal challenge”.

Despite these essential materials being vulnerable to geo-political upheavals, it said, Europe remains too reliant on foreign supply, with recycling rates “close to zero”.

“We’ve been recycling for centuries, it’s one of the oldest professions,” said Pascal Leroy, from the WEEE Forum, one of the authors of the report.

“What makes this era different from previous eras is that we need the critical raw materials to make products that sustain our high tech lifestyle,” he said.

Supply chain ‘vulnerable’

With these elements needed for wind turbines and electric cars, they also play a crucial role in meeting climate goals and manufacturing competitiveness.

But Leroy said Europe’s supply chain had become “too vulnerable”.

He told AFP the defence industry was particularly exposed, with everything from computer systems to drones reliant on external supplies such as rare earth elements, which almost exclusively come from China.

The report highlighted several categories of e-waste it said have high enough quantities of these raw materials to warrant being recovered.

These include materials in printed circuit boards from discarded electrical equipment; batteries from e-waste and scrap vehicles; neodymium iron boron magnets from hard disc drives and engines of e-bikes, scooters and scrap vehicles; and fluorescent powders from lamps and cathode ray tubes—found in TVs and monitors.

It found that low and volatile prices for many of these raw materials means that recycling is often considered too costly for businesses.

The report called for legal requirements to recycle and reuse critical raw materials, financial incentives to support industry and better controls on shipments of e-waste out of the EU.

“No one will do this voluntarily, because it costs money,” said Leroy.

Lost for tomorrow

According to the United Nations, more than 50 million tonnes of electronic waste was discarded in 2019, with the vast majority ending up in landfill and on scrap heaps.

With only 17 percent of products recycled, the UN estimates that materials worth more than $55 billion (50 billion euros) are being wasted every year.

Meanwhile, more must be mined to make new products, sparking environmental and human rights fears.

Federico Magalini of sustainability consulting firm Sofies, another author of the CEWASTE report, said that these materials are often present in such tiny quantities in each individual item that they are overlooked.

For example, the report estimated that in 2025, discarded fluorescent lamps in Europe will contain 92 tonnes of critical raw materials.

Printed circuit boards in the region’s e-waste could contain as much as 41 tonnes of silver and 10 tonnes of gold in 2025, it said.

These quantities would be roughly the same as the amount used to make new items, said Magalini.

And even when electronic products are recycled, some of these elements are not recovered, he added.

“What we lose today is lost even for tomorrow.”

We hope you enjoy this weeks read, if you would further information in regard to either this week’s Bond issue or purchase or selling shares, please do not hesitate to contact me.

I would also note our thanks to Diligent Compliance and the Governance Institute of Australia for their article for download in link below.

APAC Measuring Compliance

Regards

Chris


Have a great week and regards,

Chris Hagan,

Head, Fixed Interest and Superannuation

JMP Securities

Level 1, Harbourside West, Stanley Esplanade
Port Moresby, Papua New Guinea

Mobile (PNG):+675 72319913
Mobile (Int): +61 414529814

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