Weekly Market Review (13 August 2018) - What happened & What's next?
- JCI rose 1.2%WoW to 6,077.17 last week, outperforming other regional market (Dow Jones was -0.6%WoW) thanks to big cap performance despite foreign net outflow during the week of around USD50mn; domestic market was also buoyed by above expectation 2Q18 GDP number. However, at the end of the week, there was concerns on the market about the possibility of contagion effect from Turkey crisis which induced risk-off mode in the market. Miscellaneous was the most performing sector (+3.1%WoW), boosted by ASII (+3.8%WoW), while agri was the worst performing sector (-0.4%WoW) after rallying in the previous week. This week, news flow to be watched includes Bank Indonesia reference rate decision and July trade balance data as well as China Industrial Production data.
- IDR was flat at IDR14,478 (-0.1%WoW), outperforming other regional market currencies. Furthermore, DXY index continued to be stronger 1.3% WoW.
- Lowering bond issuance target made bond market yield decreased by 11-23 bps across the curve. 10 years yield decreased the most, from 7.88% to 7.65%.
- 10 year US treasury yield decreased from 2.95% to 2.87% driven by concern over Turkey contagion risk. There was a strong risk-off move in global markets as President Erdogan’s speech failed to calm nerves and President Trump pledged to double the steel and aluminum tariffs against the country.
- US inflation in Jul-18 were 2.9%YoY and 0.2%MoM, both were in line with market expectation.
- China forex reserves at the end of Jul-18 rose USD5.8bn from the previous month to USD3,117.9bn.
- China recorded a trade balance surplus of USD28bn in Jul-18 and came in below market expectation of USD39bn.
- Meanwhile, China Jul-18 inflation was 2.1%YoY, relatively in line with consensus at 2.0%YoY.
- Indonesia forex reserves at the end of Jul-18 declined USD1.5bn to USD118.3bn. The reserve was equivalent to 6.7 month of imports and government external debt servicing.
- Indonesia booked larger Current Account Deficit of USD8.0bn in 2Q18, or equivalent to -3.0% of GDP from -2.2% during 1Q18. The deficit came in slightly above expectation that was attributable to seasonal factor as well as continued oil and gas deficit. However, as seasonal factors diminished, CAD is expected to be lower than 3% in 2H18.
Foreign net purchases of Indonesia equities