Weekly Market Review (31 July) - What happened & What's next?
- JCI rebounded 1.1%WoW to 5,831 that was supported by good 2Q result from some companies, but foreign remains as a net seller with USD160.8mn outflow. On sector basis, infrastructure sector was the most performing, gaining 2.9% supported by good 2Q result such as TLKM (+3%WoW) and JSMR (+8%WoW). Meanwhile, agri was the most underperform sector, losing 2.8%WoW from weak 2Q result. Regional markets were positive with Euro index (SX5E index) gained 0.5%WoW and US Dow Jones rallied 1.2%WoW, closed at another record high driven by solid 2Q US GDP growth. Things to be watch this week are last batch of 2Q result, Indonesia inflation, and US nonfarm payrolls data.
- IDR remains stable, slightly depreciated by 0.1% to Rp13,324/US$, slightly underperforming the other emerging currencies.
- Concern about balance sheet reduction made bond market weakened last week. Indonesia 10 years yield increased from 6.89% to 6.94% and 20 years yield increased from 7.54% to 7.64%. Investors are seems on the wait-and-see mode for next move from global central bank. Foreign still added Rp2.61tn inflow last week.
- US GDP grew at an annual rate of 2.6% in the second quarter, slightly below consensus of 2.7%. The GDP grew faster after below trend GDP growth at 1.2% in first quarter, driven by stronger personal consumption and government spending. Dollar index continued to decreased by 0.64% and US treasury yield increased from 2.24% to 2.30%.
- FOMC decided to maintain its reference rate at 1.00-1.25% which was already anticipated by the market. Market will focus on balance sheet reduction policy where more detail is expected to be announced soon.
- US 2Q real GDP growth was 2.6%, slightly below market expectation of 2.7%, but stronger than previous quarter.
- China PMI Manufacturing Index for Jun-17 stood at 51.4, inline with consensus at 51.5. This indicated that China economy was still relatively in good position.
- House of Rep approved 2017 state budget revision. Under the revised budget, the deficit is expected to widen to 2.92% of GDP. However, assuming the historical absorption of government spending, the deficit could only widen to 2.67%.
- Ministry of Trade decided to drop the regulation that cap retail rice price at Rp9,000/kg as it caused confusion and anxiety in the market. It will discuss again the highest retail price by involving various parties.
Foreign net purchases of Asian equities