Weekly Market Review (06 November) - What happened & What's next?
- Amid relatively none of capital inflow/outflow, JCI leaped +1.1% WoW to IDR6,040, outperform the regional market,. It was lifted by financial services (+2.4%WoW) and Basic Industry (+2.2%WoW) sectors due to decent earnings results and acquisition rumor. On the other hand, trading sector was the laggard. In global side, US market posted a record level high (Dow Jones +0.4% WoW), egged on tax reform plan, appointment of Jerome Powell as the next Fed Chairman and the lowest unemployment rate in 17 years.
- The rupiah appreciated 0.8%WoW to IDR13,498/USD, the most among peers. Meanwhile, USD was relatively flat to all other currencies (DXY 0% WoW).
- Expectations of higher Indonesia GDP growth and deceleration inflation data had decreased Indonesia government bond yield last week by 15-21 bps. Buying flow come from domestic investor, while foreign investor reduced position by 3.41 T. 20 years yield decreased by 21 bps and 10 years yield decreased by 18 bps.
- US Treasury yield decreased from 2.42% to 2.34% driven by US NFP data that rose 261.000, below consensus of 310.000. Dollar currency stabilized at 94.9.
- US economy remains strong as US’s unemployment rate fell 0.1% to 4.1% in October, the lowest in 17 years.
- President Donald Trump formally announced on Thursday that he would nominate Federal Reserve governor Jerome Powell to be the next chairman of the central bank. Most investors see this appointment would have no significant change from Janet Yellen’s regime in term of Fed rate hike policy.
- Saudi Arabias’ government arrested royals and cabinet ministers in a crackdown against alleged corruption that comes as the Saudi leadership is seeking to consolidate power during a period of political transition. Therefore, it would have a positive impact to oil price.
- Inflation rate remains manageable as Oct17 inflation decelerated to +3.58% YoY (Sep17: +3.72% YoY), while core gauge accelerated to +3.07% YoY (Sep17: +3.0% YoY).
- BI plans to finalize spatial LTV in Nov17, to boost property market and housing credit, price, and NPL.
- The compliance rate for taxpayers who have a tax ID and submit annual filing increased to 71% in 2017 from 63.2% in 2016. Current tax basis is 36m, of which 16.6m are obliged to submit annual filing. Hence, tax ratio and Gvt’s tax revenue will be improving in the long run.
Foreign net purchases of Indonesia equities