Weekly Market Review (2 May) - What happened & What's next?
- JCI increased by 0.4%WoW to 5,685.3 in line with regional market (Dow Jones rose 1.9%WoW) after Emmanuel Macron led the 1st round of French election, easing global geopolitical risks as he favors to keep France in the EU. Financial was the most performing sector in JCI during the week gaining 1.7%WoW due to continued foreign inflow; meanwhile, miscellaneous sector declined 2%WoW due to profit taking in ASII given its strong gain in the previous week. Foreign continued to be a net buyer with USD307mn of inflow during the week. This week, market awaits for 1) Indonesia inflation and 1Q17 GDP 2) FOMC rate decision and nonfarm payrolls and 3) China foreign reserves data.
- IDR slightly depreciated by 0.1% against USD to Rp13,329, slightly underperforming other EM currencies.
- Indonesia government bond market transaction was relatively muted last week with small change of 1-2 bps in yield. Buying interest from foreign investor was still seen last week. Foreign investor recorded inflow of Rp8.7tn, mostly for 10yr and 20yr benchmark series. 10year yield decreased from 7.02% to 7.01% and 20year yield decreased from 7.70% to 7.68%.
- US 10 year yield stabilized at 2.29-2.33% level, but the curve steepened to the widest level seen since Feb 2017 after Treasury Secretary Steven Mnuchin said ultra-long bond issuance could “absolutely” make sense. The curve reached a session high of about 116.6bps, two days before the Fed is set to announce its latest policy decision.
- China Caixin Manufacturing PMI in Apr was 50.3, below the consensus expectation of 51.3.
- US new home sales for Mar came in at 621k, above the market expectation of 584k.
- Bank of Japan decided to maintain its current monetary policies but slightly upgraded business condition assessment.
- ECB also announced no policy changes in its meeting (maintaining EUR60bn assets purchase program until at least end of this year).
- Indonesia inflation in Apr-17 came in at 0.09%MoM and 4.17%YoY, slightly above market expectation of 0.05%MoM and 4.1%YoY.
- Indonesia total realized investment grew by 13%YoY in 1Q17, mostly driven by Domestic Direct Investment which grew by 37%YoY. Meanwhile, Foreign Direct Investment only grew by 2%YoY.
- Bank Indonesia may revise its 2017 current account deficit target to below 2% of GDP given a trade balance surplus of USD3.9bn in 1Q17.
Foreign net purchases of Asian equities