Weekly Market Review (11 Sept) - What happened & What's next?
- JCI remain lacked of catalyst and ended flat last week (-0.1% WoW) to 5,857.1. Foreign continued to be a seller during the week, seeing higher outflow at USD492mn. Property sector was the most underperforming sector during the week, declining -1.8%WoW, while agriculture was the most performing one driven by WoW higher CPO price. Meanwhile, regional market still overshadowed by geopolitical risk (Dow Jones declined 0.9%WoW). This week, some usual economy data is expected to be out namely US inflation and Indonesia trade balance data.
- IDR continued to appreciate (1%WoW) closing at Rp13,185/USD, outperforming other emerging currencies due to foreign inflow to bond market.
- Low US Treasury yield and buying flow from foreign investor made Indonesia bond yield continued to decreased across the curve by 12-27 bps last week. Mid tenor yield decreased the most by 27 bps while 20 years yield decreased by 12 bps. The spread between 10 years US treasury yield and Indonesia bond yield narrowed to 431 bps, below 1 year mean of 500 bps.
- US Treasury yield decreased from 2.17% to 2.07% driven by increased geopolitical tension. Dollar currency also decreased from 92.3 to 91.5 Investors still wait the ECB comment after it decided to leave interest rate unchanged.
- As expected, ECB maintained all main parameters of its monetary policy program. There was no big surprise in the policy given the same statement vs July’s meeting as Euro rally became a concern to tighten monetary policy. However, markets will wait for its Oct meeting whether the amount asset purchase program will be reduced.
- China inflation for Aug-17 was 1.8%YoY, higher than 1.6%YoY of inflation expectation.
- China booked trade balance surplus of USD41.99bn in Aug-17, lower than consensus expectation of USD48.45bn.
- Indonesia booked a MoM deflation of 0.07% during the month of Aug-17 (vs 0.06% MoM inflation of market expectation) mostly driven by foodstuffs deflation. This brought YoY inflation at 3.82% vs 3.99% expectation.
- Indonesia forex reserves for the month of Aug-17 stood at USD128.79bn, higher than the previous month at USD127.76bn.
Foreign net purchases of Indonesia equities