Weekly Market Review (9 Jan) - What happened & What's next?
- JCI held up strongly, went up by 0.9%WoW to 5,347, in line with regional market movement (Dow Jones +1.0%). Market still digest what is Trump’s next policy, while we are getting closer to inauguration in 20 Jan 2017. In domestic market, consumer was a leading sector with 3.0% return as the sector has been laggard for a while and investors anticipate for price increase in January. Meanwhile, Agriculture sector dropped the most by 2.0% as investors prefer to lock profit while CPO price was relatively stable. Net foreign outflow was muted (-US$27m). Things to be watch this week are China CPI and US jobless claim.
- USDIDR appreciated by 0.8% to Rp13,371/US$ in line other EM currencies
- U.S. Treasuries rallied the most since Brexit with the yield on the 10-year benchmark falling 8bps to 2.42%. US nonfarm payrolls grew by 156,000 jobs in December vs consensus expectations of 176.000. The Bloomberg Dollar Spot Index fell 1%.
- Based on bond ownership data from DJPPR as of January 5, foreign net sell of 1.48 Tn in Government bonds, foreign ownership decreased from 37.53% to 37.30% last week. Onshore banks was the biggest buyer mostly on 5 year benchmark.
- By the end of last week, 10 year Indonesia bond yield decreased from 7.59% to 7.55%. Last week bond market transaction was relatively low, as shown by lower than average trading volume of Rp 9.35 T, lower than YTD average of 12.43 T.
- Total bids for the first bond auctions in 2017 was solid, with 36.9T , with the most demand was coming from SPN 3 month. Foreigners bids reported Rp 8.2tn/22% of total bids
- Minutes of FOMC suggested that Fed is less hawkish than market expect, as some of Fed’s participants have already assumed Fiscal expansionary by Trump’s administration
- China FX reserve fall to the lowest level since Mar-11 to US$3.0tr in December, as more money flow out the country. However, the amount of the reserve drop was in line with consensus estimate
- Banking industry target NPL to decline to 2.76% in 2017 from 3.04% as of Dec-16 according to OJK estimate. Improvement in asset quality is expected, in line with our discussion with banks management.
- Government revenue in 2016% grew by 4%yoy to Rp1,551.8tr. Meanwhile, spending increased by 3%yoy to 1,859.5tr. Overall, the budget deficit reach 2.46%. Also, worth noting that in 2016, there was Rp107tr contribution from tax amnesty
- Government decided to increase VAT for tobacco sector to 9.1% from 8.7% previously.
Foreign net purchases of Asian equities