Weekly Market Review (12 Mar 2018) - What happened & What's next?
- In last week, under IDR4.5trn net foreign outflow, JCI was corrected by -2.3%. JCI movement was in line with several major ASEAN countries indices (PCOMP -1.0% wow, SET -2.0% wow, and KLCI -0.7% wow), but in opposite with rebound in global market (S&P500 +3.5% wow, MSCI Europe +2.9% wow, MSCI Asia ex Japan +1.8% wow). The situation was a reverse from the movement in two week before in which JCI was defensive amid global market correction. The global market rebound was driven by 1) Trump decision to exempt Canada and Mexico as he implemented the aluminum and steel import tariff which ease down the fear of trade war and 2) strong US employment number but with moderate wage inflation. Sector-wise, consumer performed the worst (-5.0%), while infra sector (+0.1%) came as the most defensive.
- Last week IDR weakened by 0.3% against USD, closed at Rp13,797/USD, in line with most emerging market currencies. DXY itself strengthened by 0.2% wow.
- Foreign investor reducing ownership in Indonesia government bonds by IDR10.8trn, followed by onshore banks which also reducing their position by IDR9.6trn. Negative sentiment from Moody’s comment on Indonesia fuel subsidy add more pressure to Indo GB resulting in 10 year bond yield increase from 6.57% to 6.82%. While UST 10 yr yield only increased 3 bps to 2.89%.
- Newsflow to be watched within this week including US CPI and industrial production, China retail sales and industrial production, and Indo trade balance.
- Trump signed tariff order on steel and aluminum, while excluding Canada and Mexico and leaving the door open to sparing other countries on the basis of national security. The exemption was viewed positively by the market as it ease down the likelihood of trade war.
- February data for US change in nonfarm payroll came at 313k, far stronger than expectation at 205k. While the same month data for average hourly earnings rose by 2.6% yoy, slightly below expectation at 2.8%. The data points were positive for market as it shows continuous improvement in economic recovery but with soft inflationary wages which reduce fear that Fed had been lagged behind and need to hike more than three times this year.
- ECB maintain its marginal lending facility at 0.25% and deposit facility at -0.4%
- February China CPI came at 2.9% yoy, higher than expectation of 2.5%
- February Indo forex reserve came at USD128.06bn, down from previous month at USD131.98bn, most likely due to intervention on USDIDR.
Energy and Mineral Resources Ministry issued a decree regulating coal price for PLTU to be set at USD70/ton or domestic coal reference (HBA), whichever is lower.
Foreign net purchases of Indonesia equities