Weekly Market Review (14 May 2018) - What happened & What's next?
- JCI rebounded last week, gaining 2.8%WoW to 5,956.8 despite below-expectation 1Q18 GDP data and continued foreign outflow of USD114.8mn. JCI movement was also in line with regional market which also rose during the week (Dow Jones was up 2.3%WoW). The strongest rebound was seen on consumer and bank sector which was hit the most in the previous week; both sectors gained 6.9% and 4.4% respectively last week. This week, market awaits for Indonesia trade balance data (Apr-18), Bank Indonesia reference rate decision, and China Retail Sales and Industrial Production data.
- IDR was relatively stable at Rp13,960/USD last week (0.1% depreciation), neutral to other emerging currencies. Pressure on IDR slightly diminished as Bank Indonesia iterates its stance to be more hawkish to stabilize the currency. Meanwhile, USD index was also flat during the week.
- Ahead of BI meeting, bond market yield continue to increase by 20-23 bps across the curve. Sentiment on rate hike escalated, with BI continue to communicate possibility of rate hike. 10 years yield increased from 6.95% to 7.17%.
- Selling pressure still persist. Foreign investor continue to reduce ownership by Rp8.55Tn mostly on short and mid tenor series.
- Lower than expected US inflation data at 0.2% vs consensus of 0.3% in April made US Treasury yield stay in the range 2.95%-2.97%.
- China’s forex reserve at end of Apr-18 was USD3,124.8bn, down almost USD18bn and came in below market expectation of USD3,131bn.
- China recorded a trade balance surplus of USD28.8bn in Apr-18, slightly above consensus at USD27.7bn.
- US consumer price index rose 0.2%MoM in Apr-18, slightly less than expectation of 0.3%MoM. YoY CPI reached 2.5% and was in line with consensus.
- Indonesia’s economy grew by 5.06%YoY in 1Q18 on the back of growth in investment (+7.95%) and consumer spending (+4.95%), came in slightly below of market expectation at 5.19%.
- Indonesia forex reserves declined USD1.1bn to USD124.9bn in April-18. The decline should have been higher as the government issued a global bond amounting USD2.2bn in Apr-18 which helped the reserve position.
- Indonesia current account deficit narrowed to USD5.5bn or -2.15% of GDP in 1Q18, came in better than market expectation of around 2.4% and improved from -2.34% in 4Q17.
Foreign net purchases of Indonesia equities