Weekly Market Review (23 July 2018) - What happened & What's next?
- After a strong rebound and foreign inflow in previous week, foreigners took a U-turn to sell USD47m. Hence, JCI, fell -1.2%WoW to IDR5,872, underperforming regional markets last week. Trade sector declined the most (-3.0%WoW). Meanwhile, Agri sector was the best performer (+1.0% WoW), due to a slight rebound in CPO price. On the other hand, US market continued its positive run, as US economic data remained robust. Global market seems to be more cautious as US President threatened to slap tariffs on USD500bn Chinese goods imported to US. Newsflows to be watched within this week include US New Homes Sales, Initial Jobless Claim and GDP 2Q18.
- IDR weakened by -0.8% WoW to IDR14,495, underperform regional market. Furthermore, DXY dropped -0.7% WoW.
- Bond market yield increased by 19-46 bps along with rupiah depreciation by 0.3% to IDR14.480. 10 years series increased the most by 46 bps, from 7.4% to 7.86%
- Foreign investor continue to accumulate position by 6T, focused on 5 years and 10 years benchmark series. BI also start bidding the market on 10 years series
- Recent testimony by Fed Chairman Jerome Powell and reports of labor shortages in the Beige Book suggest the Fed remains on track to raise rates once or twice more in 2018, after raising rates twice already this year. This made 10 years US Treasury yield increased from 2.83 to 2.89% over the week.
- US Initial jobless claims fell to 207,000 for the week ended July 14, below market expectation of 220,000.
- China's retail sales of consumer goods grew +9.0%YoY (vs +8.5% in May) in June’18, slightly higher-than-consensus expectation.
- China’s industrial output rose +6%YoY in June’18, below the expectation of 6.5%.
- China’s home prices rose at the fastest pace in 21 months in June by gaining +1.1%MoM (vs +0.8%MoM in May), despite the government stepped up a campaign against property speculation.
- US retail sales rose +0.5% last month, in-line with consensus. Data for May was revised higher to +1.3%, from previously reported +0.8%.
- Jun’18 trade balance recorded USD1.7bn surplus, higher than consensus estimate at USD968m. Overall, exports and import each grew by 11.5% and 12.7% respectively, compared to 15.6% and 29.1% in May’18.
- Bank Indonesia kept its 7-day Reverse Repo Rate (7DRRR) at 5.25% after the 100bp increase in May-Jun’18.
Foreign net purchases of Indonesia equities
Source: Credit Suisse, Stock exchanges of India, Indonesia, Korea, Philippines, Taiwan, Thailand, Malaysia, Singapore, Hong Kong and Japan as of 19 July 2018