Weekly Market Review (19 Feb 2018) - What happened & What's next?
- Amid volatility on global market and IDR1.58trn foreign outflow last week, JCI gained +1.32%WoW, relatively in-line with Asian market. It was led by mining sector (+4.9% WoW), as the coal price remained above USD100/mt. Meanwhile, consumer was the most laggard, fell -0.2%WoW. On the other hand, Dow Jones jumped +4.3%WoW, after hefty correction in previous week.
- IDR weakened by -0.5% WoW to IDR13,560/USD, relatively in-line with emerging market peers. Meanwhile, USD index (DXY) was down by -2%WoW, despite stronger than expected US inflation. It was due to improvement and more balance in the global economy growth. Hence, it drags investment away from the U.S. and towards more interesting markets.
- IDR bond market yield slightly decreased by 2-5 bps across the curve, after the Fed raising interest rate but still maintain gradual rate hike projection for 2018. Foreign investor continue to add IDR bond holdings by approximately IDR1trn. 10 years yield decreased from 6.52% to 6.47 while 20 years yield decreased from 7.24% to 7.22%.
- Government sets 2018 gross bond issuance target at IDR846.4trn. Government planned to issue 20% of gross issuance target in global bonds and 80% from domestic issuance.
- US inflation beat expectation at +0.5% MoM, while YoY inflation were at +2.1% vs consensus +1.9%. Core CPI inflation in January was much stronger than expected at 0.349% MoM, the strongest one-month increase since March 2005, driven by broad-based increases in costs like rent, clothing and medical services. Therefore, Fed guided gradual approach to raise rates this year.
- US Initial jobless claims increased by 7,000 to a seasonally adjusted 230,000 in the week ended Feb. 10, relatively in-line with consensus expectation. However, it still remained near historic lows, below 300,000 for almost three years.
- India’s headline CPI inflation remained above 5% in January. Headline CPI inflation remained elevated at 5.1% YoY (vs. 5.2% YoY in Dec).
- Bank Indonesia continued to keep the 7-day repo rate unchanged at 4.25%, relatively in-line with market expectation. Lending and deposit rates were also kept unchanged at 5.0% and 3.5%, respectively.
- Trade balance came in deficit of –USD676m in Jan’18, deeper than in Dec17 at –USD270mn. Exports and imports rose by +7.9% YoY and +26.4% YoY, respectively, from 6.9% and 17.8% in Dec’17. Moreover, imports accelerated on investment-related activities, which indicates an improving demand.
- Tax revenue reached IDR78.5trn (+12% YoY) in Jan’18, 5.5% realization from 2018 target of IDR1,424trn. The growth derived both from income tax and value added tax, which grow by double digit.
Foreign net purchases of Indonesia equities