Weekly Market Review (22 Jan 2018) - What happened & What's next?
- JCI topped another new high last week, gaining 1.9%WoW to 6,490.9, in line with global market that was still in positive momentum along with the expected (Dow Jones rose 1%WoW). Mining was still the most performing sector in JCI, soaring 4.7%WoW and agriculture was the worst performing sector, ended flat WoW. Foreign continued to be a net buyer with about USD75mn of inflow. Bank Indonesia kept its reference rate unchanged during the week and China 4Q17 GDP came in slightly above consensus. This week, market awaits for US 4Q17 preliminary GDP data.
- IDR continued to appreciate slightly by 0.3%WoW to IDR13,316/USD, relatively in line with most of emerging market currencies.
- There were mixed data from the global last week. China good GDP growth at 6.9% year on year should bring positive sentiment for emerging markets. However, the positive sentiment was cope by U.S. shutdown issue, which had driven US 10 years yield to increase from 2.55% to 2.66% (highest level since 2014) and turn investor to be more cautious. At the domestic bond market, most activity still in mid tenor series, with 10 years Indo bond slightly increased from 6.02% to 6.06%.
- 10 year US Treasury yield increased from 2.55% to 2.66% on the backdrop of good weekly jobless claim which reached 220.000 last week and the US government shutdown concern. The US government shutdown also made DXY currency decreased by 1.38%.
- China recorded 4Q17 GDP growth of 6.8%YoY and came in slightly above market expectation of 6.7%YoY. Meanwhile, Industrial Production and Retail Sales data in Dec-17 were at 6.2%YoY (vs 6.1% consensus) and 9.4%YoY (vs 10.2% consensus).
- US jobless claims fell more than expected last week to 220k, the lowest level in 45 years, but this could be due to seasonal adjustment problems after it experienced four consecutive weeks of increases.
- Bank Indonesia kept its reference rate unchanged at 4.25% (as expected by the market), reassured by domestic economic recovery momentum. It maintained its forecast of 5.1-5.5% GDP growth, 2.5-4.5% inflation, and 10-12% credit growth in 2018.
- Indonesia posted USD270mn of trade deficit in Dec-17 due to deceleration in exports at +6.9%YoY (vs prior month +13.5%YoY) while imports held up well at +17.8%YoY (vs 19.2%YoY previously).
- President Joko Widodo carried out a third cabinet reshuffle that strengthen the coalition with the Golkar party and the military. Moeldoko, ex-Army Chief, replaces Teten Masduki as the Chief of Staff, the latter now acting as Special Staff Coordinator. Golkar Secretary General Idrus Marham substitutes for ex-Minister of Social Affairs Khofifah who will compete in the East Java gubernatorial race. Note that Golkar Chairman Airlangga Hartanto remains as Minister of Industrial Affairs.
- BI projects Jan18 inflation of +3.2% YoY (Dec17: +3.6% YoY), implying +0.6% MoM upside.
Foreign net purchases of Indonesia equities