Weekly Market Review (25 June 2018) - What happened & What's next?
- JCI slumped -2.9%WoW to IDR5,8251.81, slightly better than regional markets that fell -3.2% WoW as Foreigners continued to sell USD274m last week (YTD -USD3.6bn). Moreover, trade war between US and China remains as one of the biggest investors’ concern given both countries threaten to retaliate. Property sector declined the most (-5.1% WoW) last week due to concern on rising rates despite potential LTV relaxation from BI. Mining sector was the best performer (+0.6% WoW), propped up by steady coal price at high price level. Newsflows to be watched within this week include US New Home Sales, Initial Jobless Claim, GDP 1Q18 and PCE; China BoP and PMI; Indonesia Reference Rate Decision.
- Post long holiday, IDR continued to depreciate by -1.1% WoW, underperforming other currencies due to fed rate hike and U.S. – China trade war. Meanwhile, DXY was up +0.3%WoW.
- Recent escalation in trade tension between US and China and possibility of BI rate hike made bond yield increased 10-15bps across the curve. 10 years series increased from 7.3% to 7.5%
- Foreign investor reduce position on Indo GB, by approximately IDR2trn, especially on mid and long tenor series.
- Concern about potential trade war made US treasury yield stay in the range of 2.9-2.95% last week. There is possibility US will impose more tariffs to Chinese goods following a previous list of USD50bn worth.
- U.S. Initial jobless claims dropped by 3,000 to a seasonally adjusted 218,000 (vs 220,000 forecast) in the week ended June 16, declined for four straight weeks. The U.S. labor market is viewed as being near or at full employment, with the jobless rate at an 18-year low of 3.8%.
- BI opens the possibility of having another hike in the next BI meeting on 27-28 June to respond the latest update from US Central Bank which increased their benchmark rate 25bps.
- May motorcycle sales grew by 11%YoY and grew by 1.4%MoM, reaching 589.3k units. Year to May sales grew by 15%YoY from 2.32m to 2.63m units. Total motorcycle sales is forecasted to reach 6-6.1m unit, increased from 5.8m unit in 2017.
Foreign net purchases of Indonesia equities