Weekly Market Review (7 Aug) - What happened & What's next?
- In opposite to positive regional market which still embracing the global central banks dovish tone, last week JCI went down by -0.9% to 5,777.5 amid soft 2Q result. Foreign outflow of IDR431bn also added to the pressure. Property sector performed the best (+1.8% wow) while consumer performed the worst (-3.7% wow) due to weak results. Important news flow to be watched within this week are China inflation and trade balance, US initial jobless claim, and Indo current account and inflation.
- IDR closed flat against USD at IDR13,316/USD (-0.06%) amid slightly strengthening other emerging currencies.
- Bond market strengthened last week, after BI signaled easing if inflation continues to be manageable until year end. 10 years yield decreased from 6.94% to 6.87%, while 20 years yield decreased from 7.64% to 7.6%. The rally triggered by foreign and domestic investor. Foreign still added position by IDR 3 Trillion last week.
- Several latest US dataflow still shows good sign of growth (July ISM manufacturing survey at 56.3, similar to expectation at 56.5) and employment (July change in nonfarm payroll at 209k vs expectation at 180k; 29 Jul initial jobless claim came at 240k vs expectation 243k, unemployment at 4.3% as expected), however personal income was below expectation ( Jun numbers at 0.0% mom vs expectation 0.4%). The divergence between satisfying growth (and strong employment) against soft inflation has been a significant consideration for the Fed in deciding its tightening pace which up until now has been resulted in a more dovish trajectory.
- Indo 2Q GDP growth came at 5.01%, below expectation at 5.08% due to slipping government spending from +2.7% yoy in 1Q to -1.9% in 2Q
- July CPI came at 0.22% mom, slightly above expectation at 0.19%, which brought yoy CPI to 3.88%
- The two numbers above reemphasize the contrast between solid stability against meek growth within our macro performance which attract more foreign bond investors in relative to foreign equity investors.
Foreign net purchases of Asian equities