Weekly Market Review (2 Apr 2018) - What happened & What's next?
- With continuing net foreign outflow of IDR2.4trn, JCI slightly corrected by 0.3% in last week, in contrary to global market which rebounded from previous week correction. The rebound on global market was supported by easing tension on trade wars, even though there was one day of correction due to technological stock sell off on Facebook issue. By sector, agriculture (+3.5% wow) performed the best last week, while financial (-1.4% wow) performed the worst. Several newsflow to be watched this week including: China’s forex reserve, trade balance, and inflation; US trade balance and inflation; and Indo forex reserve.
- IDR slightly strengthening last week, closing at Rp13,766/USD (-0.1% wow), in line positive movement of most emerging market currency against the USD. The USD index itself rose by 0.8% in the same period.
- Ahead of domestic CPI data and decreased US Treasury yield (to 2.74%), IDR bonds yield traded lower by 20-24 bps for the 10 and 20 years series, while 5 years series unchanged.
- Buying interest come from offshore, especially from European accounts. The interest is mainly on mid and long tenor part of the curve.
- 10 years treasury yield continued to fall from 2.82% to 2.74%. The curve continued to flatten, as the spread 2 an 10 years narrowed to 48.87 bps, lowest since 2007.
- China is implementing new tariff on 128 kinds of US product, including items from dairy and agriculture products, in response to US steel and aluminum import tariff. It is not a retaliation against Trump plans to hike tariff on up to USD60bln import from China. The items in the list is the same with the draft that proposed by the government on March 23. It may offset the positive sentiment from the previous week when the tension has eased down when China offered to buy more semiconductors from the US to help cut its trade deficit.
- China manufacturing data shows mixed result in March with its Manufacturing PMI came at 51.5 (higher than expectation at 50.6) while its Caixin Manufacturing PMI came at 51.0 (lower than expectation at 51.7). PMI (purchasing manager index) is a survey toward purchasing manager, asking the direction of their purchasing plan. A level above 50 indicates expansionary sign while level below 50 indicates contractionary sign. The Manufacturing PMI is the official data from China Federation of Logistic and Purchasing while Caixin Manufacturing PMI is provided by Markit, a private financial service company.
- US initial jobless claim (24 Mar) came at 215k, lower than expectation at 230k, indicating a positive employment figure. In the other hand its Feb PCE Core yoy came at 1.6%, indicating that inflation is still relatively soft.
- Nikkei Indo Manufacturing PMI came at 50.7 in March, slightly lower than its previous level at 51.4
- Government plans to lower tariff of 39 sections of toll road which has tariff higher than IDR1000/km. They plan to compensate it by giving longer concession period.
Foreign net purchases of Indonesia equities