Weekly Market Review (10 September 2018) - What happened & What's next?
- JCI declined by 2.77% WoW to 5851.47, in line with the negative trend in the regional market (MSCI Asia ex-Japan -3.3% WoW) mainly due to renewed concerns over the emerging currencies, with the spotlight on Argentine Peso (ARS) last week. ARS depreciated by 4.4% intraday when the government requested IMF to speed up its $50bn loan disbursement. The rising trade tension between US and China worsened the situation. These pressured Indonesian Rupiah (IDR) to reach its historical high of Rp15,000/USD (ex. 1997-8 AFC) before strengthening back to Rp14,884/USD by the end of the week. We saw foreign outflow of USD187mn for the week. Consumer was the best performing sector in JCI driven by the defensives UNVR/ICBP while mining was the worst performing sector mainly due to lower commodity prices arising from the trade tensions. This week, market awaits for some economy data such as China/US CPI, China/US industrial production, China aggregate financing/retail sales, and US initial jobless claim.
- Rupiah weakened by 1.18% WoW to Rp 14,884, while 1M NDF (forward) spiked to Rp15,400/USD in the middle of the week. On the other hand, DXY was relatively flat closing at 95.37 by the end of the week.
- Increasing trade tension between US and China along with rupiah depreciation made bond market yield increased by 33-40 bps bps last week. 10 years series increased from 8.1% to 8.47%
- Foreign investor decreased position on Indo GB by approximately Rp 14.22 Tn, especially on short tenor and mid tenor series.
- 10 year US Treasury yield increased from 2.86% to 2.94% driven by US nonfarm payrolls that grew by 201,000 in August, above expected consensus of 191,000. Average hourly earnings rose 2.9 percent for the month.
- US added 201,000 jobs in August, topping forecast of 191,000. Unemployment rate held steady at 3.9%. Average hourly earnings were up 2.9% YoY (vs. expectation of +2.7% YoY).
- US Commerce Department highlighted the trade deficit increased 9.5 percent to $50.1 billion as exports of soybeans and civilian aircraft dropped, and imports hit a record high.
- China August exports +9.8% YoY and imports +20% YoY, resulting in trade surplus standing at US$27.9bn vs July surplus of US$28.1bn.
- China forex reserve dropped slightly US$8.2bn in August to US$3.11tn, lower than market expectation of US$3.115tn. Nonetheless the data showed that China’s capital control measures worked reasonable well so far and thus, there was no imminent need to large scale direct intervention.
- Indonesia forex reserves declined to US$117.9bn (-US$400mn MoM). This forex reserves are adequate to finance 6.8months of imports or 6.6months of imports and gov’t external debt payments.
- August inflation inched higher to 3.2% while the eight-month 2018 average of 3.25% is below Bank Indonesia's (BI) 3.5% target. Moderating food, transportation and clothing prices have kept headline inflation well within BI's inflation target range of 2.5% to 4.5%.
- 2W wholesale rose by +58% MoM, +10% YoY to 593k units in July2018. In 7M18, sales rose by +11% YoY to 3.6mn units.
- Jokowi-Ma’ruf appoint Erick Thohir as head of campaign team. The president praised Thohir’s success in managing media, basketball and soccer clubs. Thohir also recently managed the Asian Games. The President noted that there will be increasing involvement of political figures and young professionals in his campaign.
Foreign net purchases of Indonesia equities