Weekly Market Review (13 Nov) - What happened & What's next?
- JCI declined by 0.3% last week to 6,021.83 in line with the movement of regional market where Dow Jones closed 0.5%WoW lower. Equity outflow has been stubbornly sustained with foreign net flow of USD141mn. On global side, the possibility of tax reforms delays pressured the equity market which led to some profit taking; meanwhile, in the domestic market, Indonesia 3Q17 GDP crawled up to 5.06%YoY, came in slightly below consensus at 5.19%, but reaffirming the gradual recovery from 2Q17 GDP at 5.01%YoY. Miscellaneous sector was the most performing one in JCI last week, supported by ASII (+3.1%WoW), while trade was the worst performing sector driven by profit taking in UNTR (-6.8%WoW). This week, market awaits for Bank Indonesia reference rate decision, Indonesia trade balance for Oct-17 and US inflation data.
- IDR depreciated 0.33% for the week, closing at Rp13,543/USD, slightly underperforming other emerging currencies as Dollar currency as measured by DXY Index was actually decreased 0.42%WoW.
- Positive current account deficit data in 3Q17 have little impact to bond market last week. Bond market volume was muted with bond yield increased by 2-5 bps. Foreign investor added position by Rp6.49tn. 10 years yield increased from 6.6% to 6.62% and 20 years yield increased from 7.23% to 7.28%.
- 10 year US Treasury yield increased from 2.34% to 2.4% driven by below consensus US consumer sentiment data.
- China booked slightly higher forex reserves in Oct-17 at USD3,109.2bn from USD3,108.5bn in the previous month. Meanwhile, its trade balance surplus was also higher at USD38.2bn vs USD28.5bn in Sept-17.
- US Republican senators are reportedly to delay the introduction of corporate tax cut and curb the amount of tax reduction in order to reduce the negative impact on revenue. The Senate’s draft include postponing the corporate tax rate cut to 2019 vs the House’s plan in 2018. This has put pressure on the US equity market as well as USD currency during the week.
- Indonesia 3Q17 GDP crawled up to 5.06%YoY, came in slightly below consensus at 5.19%, but reaffirming the gradual recovery from 2Q17 GDP at 5.01%YoY. The 3Q17 growth was driven by faster investment and fiscal spending which offset easing consumption and net exports.
- Indonesia forex reserves at end Oct-17 stood at USD126.5bn, declined USD2.9bn which affected by portfolio outflow (Oct-17 saw USD2.2bn of outflow, 77% of which was government bond), external debt payment and currency stabilization.
- Indonesia current account deficit (CAD) in 3Q17 narrowed to –USD4.3bn or equal to -1.7% of GDP vs -1.9% in 2Q17 which mainly due to larger trade surplus in the quarter. The 9M17 CAD to GDP is now at -1.5% and is well below BI tolerance of -2.0% of GDP.
Foreign net purchases of Indonesia equities