Weekly Market Review (6 August 2018) - What happened & What's next?
- JCI edged up 0.31%WoW to 6,007.5 last week as Foreign inflow continued (USD77mn of inflow) despite weaker than expected 2Q result. Global market was flattish (Dow Jones was only 0.05%WoW higher) although Fed became more hawkish and trade war sentiment was increasing. Agri was the most performing sector during the week, gaining 6.6%WoW thanks to Indonesia’s plan to expand 20% biodiesel mandate to non-Public Sector Obligation segment. Meanwhile, Infrastructure was the most underperforming sector due to poor result from TLKM. This week, news flows to be watched mostly from domestic i.e. ID Forex Reserves and Balance of Payment, as well as China trade balance data.
- IDR depreciated by +0.56% WoW to IDR14,498, underperforming other regional market currencies. Furthermore, DXY index was stronger 0.52% WoW.
- Trade war sentiment and Fed hawkish stance made bond market yield increased 6-10 bps last week. Trump plan to increase tariff from 10% to 25% for USD200bn China imports. 10 years series increased the most by 10 bps from 7.68% to 7.78%.
- Foreign investor increase position on Indo GB by approximately Rp10tn.
- Mixed US jobs data made US Treasury yield stay at 2.95-3%. Nonfarm Payrolls reported at 157k vs consensus 190k. Unemployment rate was in line at 3.9% vs. 3.9% consensus.
- US FOMC kept its reference rate unchanged at 1.75%-2.00%, in line with market expectation. Market expects another 2 more hikes within this year.
- US recorded a trade balance deficit of USD46.3bn in Jun, this was relatively in line with market expectation.
- US July Nonfarm payrolls data advanced 157k after an upwardly revised 248k increase in June. Meanwhile, unemployment rate was 3.9% (in line) and average hourly earnings growth was also in line at 2.7%YoY.
- China Caixin Manufacturing PMI in July was 50.8 vs 50.9 consensus expectation; this indicated slower economic activity in China.
- Indonesia inflation rose 0.28%MoM in Jul-18, translated to 3.18%YoY figure. Broiler chicken egg and broiler chicken meat took the largest inflationary pie due to shrinking supply.
- Indonesia 2Q18 GDP increased by 5.27%YoY and was recorded higher than consensus expecatation of 5.12%YoY.
Foreign net purchases of Indonesia equities