Weekly Market Review (26 Feb 2018) - What happened & What's next?
- JCI rose 0.43%WoW last week to 6,619.8 with limited catalyst in the market. Regional market (Dow increased by 0.36%WoW) initially declined during the week after FOMC minutes confirmed that the committee was becoming more confident of their growth outlook, but rebounded subsequently towards the end of the week. Foreign outflow still continued but at a lower amount at USD34mn. Mining was the most performing sector, gaining 2.2%WoW led by MEDC (up 21%WoW after its subsidiary received mineral export license). This week, there is no major catalyst in the market; some economics data will be released such as Indonesia inflation, and US and China Manufacturing PMI data.
- IDR further depreciated 1.06%WoW to Rp13,668/USD, underperforming other emerging market currencies. Meanwhile, USD index (DXY) increased by 0.9%WoW.
- Indonesia Government bond yield increased across the curve by 10 bps despite the positive news from Bloomberg Barclays index inclusion. Stronger US economic outlook implied in Fed minutes meeting release had successfully moved 10yr US Treasury yield to 2.95%, the highest level since 2013. But at the end of the week 10yr UST yield decreased to 2.88%. Foreign flow was muted. Following the movement in UST, Indonesia Government bond 10 years yield increased from 6.39% to 6.4%.
- Effective June 1, 2018, Indonesian rupiah-denominated bond will be eligible for the Bloomberg Barclays Global Aggregate Index. Fifty IDR-denominated government bonds series (Tickers: INDOGB and INDOIS) with a market value as of January 31, 2018 of $151.3bn, will enter the Global Aggregate and Global Treasury projected universes in early May 2018 and contribute to index return calculation starting June 1, 2018.
- The latest FOMC meeting minutes showed that the Fed is already sanguine on US growth prospects which makes the three hikes implied by the median 2018 dots and continued hikes in 2019 become more likely.
- US Initial jobless claims decreased by 8k back to the previous two-weeks level at 222k in the week ended Feb. 17.
- US existing home sales for the month of Jan-18 reached 5.38mn, lower than market expectation of 5.6mn.
- The government signals not to raise electricity prices throughout 2019, extended from 1Q18 previously in consideration of purchasing power.
- PDI-P nominates Joko Widodo as its presidential candidate. So far, he remains the most popular candidate (Saiful Mujani Research and Consulting survey suggests 53% of the vote).
- Government revenue reached Rp101.4tn in Jan-18, up 15%YoY supported by the increase of tax revenue of 11%YoY which was attributable to the pickup in economic condition according to tax office representative.
- Government ordered a pause on elevated infrastructure projects to re-evaluate the safety aspects of the projects. The evaluation process is expected to last in 1-2 weeks’ time.
Foreign net purchases of Indonesia equities