Weekly Market Review (29 October 2018) - What happened & What's next?
- As the street expected, IDR did not react much on BI’s decision to keep its 7-Day Reverse Repo rate at 5.75% last week. Globally, US recorded better than expected 3Q GDP number at 3.5% (vs. consensus of 3.3%). However, some of US companies reported earnings (especially for tech stocks) lower than expected while those with good earnings are seeing investors taking profit. In addition, the heated trade tension between US and China led the Dow Jones index ended the week 2.5% lower WoW while S&P 500 index was 3.5% lower WoW. China September industrial profits recorded +4.1% YoY vs +9.2% YoY in August. This is the fifth month that its growth is decelerating. On the domestic market, foreigners turned to be net sellers with USD21m net outflow with JCI weakened -0.9% WoW to 5,784.9 last week. Real estate became the most outperformed sector by gaining +0.3%WoW. Meanwhile, utilities sector slipped by -3.4%WoW, the worst performer last week. Newsflows to be watched within this week include China and US manufacturing PMI, Indonesia CPI, US trade balance, unemployment rate and average hourly earnings.
- IDR weakened slightly by -0.2% WoW to IDR15,217, slightly better than regional currencies. On the other hand, DXY increased to 96.4 (+0.7%WoW).
- Softened US GDP and stabilize IDR data made Indonesia bond market yield decreased by 2-29 bps across the curved. 20 years series decreased the most by 29 bps, while 10 years series still at range of 8.64-8.67%. 10 years treasury yield also decreased from 3.2% to 3.08%.
- Foreign investor start to increase position on Indo GB by Rp 9 Tn. European account start to accumulate 20 years series due to attractive yield.
- US reported stronger than expected 3Q GDP of 3.5% (vs. consensus of 3.3%).
- US cancelled trade talk with China last week, as Trump administration awaits firm Chinese proposal.
- Saudi Arabia highlighted that it could supply more crude oil if needed, to overcome potential oil shortage from Iran sanction. Oil price tumbled 5% on the back of this news.
- BI maintained its 7- Day Reverse Repo rate at 5.75%.
- Central Bank (BI) estimates 3Q18 GDP growth to stand slightly below 5.2%.
- Central Bank (BI) projects current account deficit (CAD) in 3Q18 to widen to 3.34% of GDP. On the positive side, FY2018 CAD is still expected to be below 3%, hence we shall see improvement in 4Q18.
- Indonesian and Japanese gov’t has agreed on the Rp10tn loan for MRT project phase 2. The loan has 0.1% interest per annum and tenor period of 40 years.
Foreign net purchases of Indonesia equities