Weekly Market Review (12 November 2018) - What happened & What's next?
- Globally, market were focusing on U.S. Midterm election as the result met the polling baseline. Democrats won the majority in House of Representatives, while Republican keeps their majority in Upper Chamber. Therefore, the market expects a more balanced fiscal outlook, some pushback on supply-side reforms and the resilient business sentiment is likely to ebb. Nonetheless, US markets was turning positive last week. On domestic side, 3Q18 Current Account Deficit was relatively in-line at –USD8,800m (vs market expectation of deficit USD9,000m) and likely to be the peak of CAD this year. Foreigners also continue to be net buyers with USD194m net inflow and JCI was moving to positive side until Thursday before it headed to negative territory by the end of the week to IDR5,874.2 (-0.5%WoW) due to potential inclusion of free float factor to LQ45 and IDX30. Trading sector became the most outperformed sector by gaining +2.8%WoW due to a robust financial results by a mining contractor and heavy equipment company. Meanwhile, Consumer sector declined the most by -4.8%WoW, as the impact of potential inclusion of free float factor. Newsflows to be watched within this week include China retail sales and industrial production; US retail sales, CPI, industrial production and initial jobless claim; Indonesia trade balance, BI 7 day reverse repo decision and auto sales
- IDR continued to rally by +1.9% WoW to IDR14,678, the best currency performance among Asia basket currency. It was mainly driven by money returning to emerging markets, lower oil price (-3.6%WoW) and Domestic NDF introductory. On the other hand, DXY increased to 96.9 (+0.4%WoW).
- Foreign flow and stabilized IDR made Indonesia bond market yield continue to decrease by 22-24 bps across the curve. 20 years series decreased the most by 24 bps.
- Foreign investor continue to increase position on Indo GB by IDR14.62trn mostly on long tenor series.
- 10 year US Treasury yield decreased from 3.2% to 3.19% as voters on mid-term election voted for a split Congress with Republicans increasing their hold on the Senate and Democrats taking control of the House of Representatives.
- US Initial Jobless Claims fell 1,000 to a seasonally adjusted 214,000 for the week ended Nov. 3, in-line with market predictions.
- US PPI for Sep’18 was +3.6%YoY (vs +4.1%YoY in Aug’18), slightly better than analysts’ expectation of +3.5%YoY.
- China’s foreign-exchange reserves Oct18’s decreased of USD33.93bn to USD3.053trn, the third consecutive monthly decline and the largest since December 2016.
- China's trade balance for Oct’18 came in at USD34.01bn (vs USD35.15bn expected), from USD31.3bn in Sep’18. Export growth was 15.6% YoY in Oct’18 (Sep’18: 14.4% YoY) and import growth was 21.4% YoY (Sep’18: 14.5% YoY)
- China's consumer inflation in Sep’18 rose +2.5%YoY and +0.7% higher than Aug’18.
- 3Q18 GDP growth of 5.17% YoY came relatively in-line to Consensus’ expectation of 5.15% YoY; normalizing from 5.27% YoY in 2Q18.
- Indo fx reserve in Oct’18 was increased by USD400m to USD115bn, for the first time since Jan’18 which was at USD131bn.
- 3Q18 CAD widened to –USD8.8bn (-3.35% of GDP) (vs –USD8.0bn (-3.04% of GDP) in the 2Q18), which is in-line with market forecast of -USD9bn.
Foreign net purchases of Indonesia equities