Weekly Market Review (24 September 2018) - What happened & What's next?
- On global side, most of emerging markets moved to positive side last week, despite US announced 10% tariff of USD200bn import from China as this action was pretty much anticipated by investors. On domestic side, JCI gained +0.4%WoW to IDR5,957.7 last week, although trade deficit was worse than expected. Foreigners turned to be net buyers by USD71m inflow. Basic Industry sector was the best performer (+2.7% WoW). Meanwhile, Agri sector became the worst performer by declining -2.4%WoW due to lower CPO price last week. Newsflows to be watched within this week include Indonesia’s BI Reference Rate; US FOMC Rate Decision, Initial Jobless Claim, New Home Sales; China’s Caixin Manufacturing PMI.
- IDR slightly weakened by -0.1% WoW to IDR14,817, worse than regional currencies. On the other hand, DXY continued to slip at 94.22 (-0.7%WoW).
- Indonesia bond market yield decreased by 17-30 bps across the curved driven by lower USD/IDR swap points from 300 bps at early September to 50-60 bps last week. Decreased swap points increased foreign investors optimism on Indonesian bonds. 20 years series decreased the most by 24 bps.
- Foreign investor start to increase position on Indo GB by approximately Rp 1.6 Tn, especially on mid and long tenor series.
- Ahead of Fed rate meetings, 10 year US Treasury yield increased from 2.99% to 3.07%. The Federal Reserve is widely expected to hike the federal funds rate next week, but investor will examine closely the direction the Fed will chart ahead.
- US Initial Jobless Claims fell 3,000 to a seasonally adjusted 201,000 for the week ended Sep 15, lower than market expectation of 210,000. It was the lowest level since December 1969
- U.S. CAD narrowed to USD101.46bn in 2Q18 (USD121.71bn in 1Q18) on ramped-up goods and services exports, lower than market expectation of USD103.2bn deficit.
- U.S. Manufacturing PMI slowed to 54.7 in August, down from 55.3 in July. It was the lowest in nine-month, but in-line with expectation.
- Indonesia’s trade deficit was recorded at USD1.bn in Aug’2018 (vs USD2bn in July’18), larger than consensus expectation of USD674m. Non-oil and gas trade balance has switched to surplus, while oil & gas trade deficit has continued to widen.
Foreign net purchases of Indonesia equities