Weekly Market Review (3 September 2018) - What happened & What's next?
- JCI rose 0.83%WoW last week to 6,018.96, in line with the positive trend in the regional market (Dow Jones was up 0.68%WoW) that was buoyed by the bilateral agreement on trade between US and Mexico. Although the market rallied, there was renewed concerns in emerging currencies namely Turkey Lira and Argentina Peso which depreciated by 9% and 19% against USD last week. Foreign inflow continued with about USD70mn for the week. Infrastructure was the most performing sector in JCI boosted by telco names on expectation on better data pricing environment. Meanwhile, miscellaneous was the most underperforming sector mainly due to profit taking. This week, market awaits for some economy data such as US trade balance and Job data, China trade and forex reserves data, as well as Indonesia forex reserves.
- Rupiah weakened by 0.42% WoW to Rp 14,710. On the other hand, DXY was relatively flat closing at 95.14 by the end of the week.
- Trade war issues and rupiah depreciation (touching 14.800 level) made bond market yield increased by 12-22 bps last week. 20 years series increased from 8.35% to 8.57%.
- Foreign investor continued to increase position on Indo GB by approximately Rp6.71tn, especially on 5 and 10 years series.
- 10 year US Treasury yield increased from 2.82% to 2.86% driven by revised up US GDP data at 4.2 percent annualized rate. That was slightly up from the 4.1 percent pace of expansion it reported in July and was the fastest rate since the third quarter of 2014.
- China Industrial Profits in Jul-18 rose 16.2%YoY, lower than Jun-18 growth of 20%YoY.
- China Caixin Manufacturing PMI for the month of Aug was 50.6, slightly lower than the consensus estimate and previous month number of 50.7 and 50.8 respectively. Lower PMI reading indicates slowing activity in China as has been anticipated by the market.
- US and Mexico have reached an agreement to change parts of the NAFTA agreement, a move that was appreciated by the market. Similar agreement is hoped from Canada as well, but the talks between US-China showed little progress.
- Argentina Peso dropped to new low despite interest rate hike to 60% last week. The Country seeks to front-load the financial package from IMF in order to back the currency.
- Perusahaan Listrik Negara (PLN) plans to purchase 2.2mn kiloliters of B20 fuel for its biodiesel-fueled power plants for 2018. This part of government regulation on the implementation of B20 policy that would come into effect in 1 September 2018. The policy is expected to save up to USD6bn worths of imports per year according to BI governor.
- The acting CEO of Pertamina, Ibu Nicke Widyawati was appointed permanently last week. She has tasks from the Government to reduce oil and gas imports, construct refineries, and expand the B20 biodiesel program.
Foreign net purchases of Indonesia equities