The Kina Asset Management Ltd (KAML) made a net profit of K3.32 million for the year ended December 31, 2020, thanks to a 6.2 per cent investment return.
The achievement was made amid the Covid-19 pandemic and continuing geopolitical conflicts, according to KAML chairman Sir Rabbie Namaliu.
Sir Rabbie praised KAML's investment strategy's diversification for providing a substantial measure of stability in a tumultuous year.
He said, “Asset allocation was maintained close to the preferred portfolio asset weights of 40 per cent domestic/60 per cent international, the latter being held in Australian stocks and global indexed funds. For KAML, this meant overall capital losses were more than offset by dividend and interest income and strong foreign exchange gains. Bank of South Pacific, KAML’s core domestic shareholding, comprising nearly 20 per cent of the portfolio, generated a return of 13.3m per cent for the year. Credit Corporation also performed strongly.”
Sir Rabbie, on the other hand, reported that Oil Quest and Kina Securities had experienced major reversals.
“Oil Search, badly affected by the pandemic-related fall in the global demand for oil, reported a negative return for the fund of -39.6 per cent,” he said. “Offshore, the recovery in Australia was less strong than in other markets, notably the United States. The year ended with modest overall capital losses on the Australian component of the portfolio, but the strength of the Australian dollar and a series of gradual reductions in the PGK/USD trading band by the Bank of PNG, more than offset this.”
Sir Rabbie reported that the net tangible asset backing per share was K1.59 as of December 31.
“However, KAML’s price of K0.90 per share represented a substantial discount to the underlying value of the company,” he said.
