Wednesday, 18 July 2012


The Moneymarket

Chances for Rupiah value to strengthen or at least to remain stable this week was good thanks to data of America’s economic recovery and Indonesia’s well maintained economy. As known, Rupiah exchange rate value against USD last Thursday (5/7) was closed to weaken by 25 points (0.26%) to the position of Rp 9,387/Rp 9,379 per USD.

However Rupiah exchange rate value against USD last week (6/7) was predicted to strengthen at limited level. The potential of Rupiah strengthening was limited due to the possible profit taking on USD, as the Europe Central Bank ECB failed to give additional surprise to the market.

The effect of ECB bank interest slashing by 35 basic points to 0.75% was only momentary so pressures on Rupiah and USD tend to stabilize unless ECB slashed interest above the expected 0.25%. Therefore Rupiah movement last weekend would also be limited with tendency to strengthen. Rupiah tends be limited with tendency to strengthen. Rupiah tends to strengthen at limited level of Rp 9,325 – Rp 9,375 per USD.

Thereafter the market’s focus of attention would be on labor market in the USA last weekend. i.e. non payroll and unemployment level. Nonfarm payroll for June 2012 was predicted to be still negative. i.e. up to become 92% compared to the previous 69 thousand. This figure was way below normal average before crisis. i.e. 200 thousand. The condition had the potential to weaken USD. Meanwhile unemployment level in the USA was predicted to settle at 8.2% which was considerably high.

Meanwhile Euro weakened against USD and Yen in line with downturn of service sector in Germany in June this increased the speculation that ECB Europe Central Bank would slash benchmark rate which turned out to be true. Euro weakened by 0.5% to the level of 100.07 yen. This Europe’s common currency of 17 European states slumped by 0.6% to the level of USD 1.2527 while yen weakened by 0.1% to become USD 79.86.

A report showed that production of the manufacturing and services sector dropped for the fifth month last June. In Germany, index of the mining sector was only 49.9 last June. Yet the index was originally predicted to reach 50,3. Index of the services and manufacturing sector in June was 46.4.

This week Rupiah was projected to continue strengthening in the range of Rp 9,300 – Rp 9,340 per USD in line with the improved economy of Greece and Spain. Hence negative rumors about Rupiah amidst uncertainty of world’s economy would be eliminated and market confidence would be regained.

Moreover last week Governor of Bank Indonesia Darmin Nasution stated that Rupiah value would strengthen in Quarter II 2012 thanks to sentiments from bettered Europe. BI predicted that pressures on Rupiah would tend to ease in second half of 2012.

Visions of improvement in Europe was shaping up although it still needed time to complete. It was envisaged that 2012 economic climate would be better and Rupiah value would not be this bad or slightly strengthened. BI rated that the funding scenario for banks of the Euro zone would not be good enough to stabilize world’s economy. Therefore BI estimated that the average Rupiah value through 2012 would be around Rp 9,100 to Rp 9,300 per USD.

Today Rupiah exchange rate value was lower than assumption of APBN-P 2012 which was Rp 9,000 per USD due to global condition. Up to June 2012 the average Rupiah value (not point to point) was Rp 9,171 per USD or weakening by 4.4% compared to average of 2011 which was Rp 8,768 per USD. By point to point Rupiah exchange rate value by end of 2012 was predicted to weaken by 3.45% to the level of Rp 9,333 per USD.

The way BI saw it, weakening of currency also befell on other countries in Southeast Asia. Korean Won weakened by 2.97% on the average, Thailand’s Baht weakened by 2.1% and India’s Rupee weakened by 10,64%.

The Capital Market

During transaction last Thursday (5/7) Index of IHSG was closed to weaken by 6,608 point (0.15%) to the level of 4,069.836 with lowest intraday of 4,058.894 and highest intraday 4,086.343 The same was with premium share LQ 45 which dropped by 2.27 ponts (0.40%) to the position of 697.566.

After rising for four consecutive days, suddenly index of IHSG weakened, although by candlestick index of IHSG weakened, although by candlestick IHSG was still in the green zone, because position during closing session was higher than that of the opening session. Meaning, IHSG was in positive area for five consecutive days with sizable volume of transactions.

Minor correction of IHSG indicated that the market was still doubtful. Under such circumstances the market must be in ready position because various indicators showed that the stockmarket was in a condition of overbought.

Therefore most probably last Friday (6/7) IHSG would be affected by acts of profit taking. Evidently during early session last weekend (6/7) IHSG was opened to sink into the red zone. IHSG was corrected by 0.31% to the level of 4,057.016. Index of JII dropped by 0,1%, index of ISSI inched down by 0.1%, index of LQ 45 fell by 0.2% and IDX 30 dropped by 0.3%.

Majority of the sectors sank deepest as experienced by the financial sector 0.5% followed by shares of the infra structure sector 0,4%. Index of 95 shares went down and 43 shares went up, while 76 other shares were still stationary. Eight shares were trapped in the red zone with the agricultural sector taking the lead, dropping by 0.71% followed by the trading sector which also fell by 0.44%.

As whole IHSG was predicted to remain stagnant in the range of 4,030 – 4,080 during closing session last week end (6/7). Technically IHSG was in the short run nearly overbought. Although dropping by last weekend, IHSG remained in a good trend for the medium term and long term. Energy-based shares which were correlated with world’s oil price seemed to be corrected in the short run.

Meanwhile Asian stockmarket weakened after central banks of some countries run monetary policy in accordance with market expectation. The ECB Europe Central Bank lowered interest rate as expected by the market, with interest rate close to zero percent or 0,75%.

Index of Nikkei inched down by 0.1%, index of Kospi slumped by 0.4% - somehow Asian stockmarket was on the ascending track this week. Index of ASZ strengthened by 1.6% and index of Kospi rose by 0.6%.

In other part of the world, US stockmarket during session on Thursday (5/7) weakened. Index of Dow Jones fell by 47.15 points or 0.36% to the level of 12,896.67. Index of S&P 500 dropped by 6.44 point or 0.47% to the level of 1,367.58 Index of Nasdaq inched up by 0,04 points to the level of 2,976.12.

Such was because stimulus injected by leading central banks failed to energize investors. Other sentiments which influenced Wall Street was policy of the central banks of China, Europe and England to ease monetary strategy. The impact was also that Euro weakened against USD.

This week IHSG stood a chance to strengthen to the level of 4,075 – 4,125 if IPO plan of new emitents were exercised as per second semester, the BEI Security Exchange stated that seven companies planned to release their shares to the public through IPO in July 2012. It was predicted that total emission value of IPO of the seven companies was Rp 4.7 trillion. One of the candidate emitents was MNC Sky Vision scheduled for July 9, 2012.

The seven companies were PT Kobexindo Tractors, PT MNC Sky Vision, PT Pembangunan Daerah Jawa Timur, PT Global Teleshop, PT Toba Sejahtera, PT Asuransi Mitramaparya, and PT Gading Development.

In Semester 2 this year stockmarket were optimistic that the stockmarket industry was changing for the better in spite of negative global sentiment. Apparently the condition of stockmarket of the world, particularly Indonesia would once again stabilize.

The improved condition of Europe, according to the reliable resources would bring positive impact in corporate actions by companies such as bond offerings and IPO. The financial crisis that befell on some countries of the Euro zone needed not be a dreadful specter. It was about time that this momentum be grabbed by investors to invest in shares or bonds.

Indonesia’s stable economy, vast population and incomparable, abundant natural resources were some determinant factors of fast growing investment. The global capital market which was full of uncertainty and often made investors’ heart beat faster should be a challenging opportunity for inviting long term investments.

Naturally it was about time to rely on domestic financial resources to obtain funds for sustainable growth instead of relying of foreign loans from overseas resources which often burden state’s finance.

The debt crisis in Europe would certainly not discourage domestic insurance industry; it was not even necessary to be over anxious about the adverse economic condition in Europe since Indonesia’s economic condition was fairly good. There was no reason for investors particularly domestic investors to worry too much about global economic condition.

The investors, particularly the domestic investors deserved to have the highest appreciation, because they were willing to invest just when prices of shares dropped significantly. It was a relief to know that Indonesia’s stockmarket was still a magnetic place for foreign investors thanks to the nation’s strong fundamental economy and high performance of Indonesian emitents which were better than that of other countries.

Until last week (6/7) throughout this year the amount of foreign net buy came to Rp 2 trillion at the secondary market, hence foreign investors saw Indonesia as an attractive place to invest. Data of PT Kustodian Sentral Efek Indonesia (KSEI) per June 2012 the value of domestic ownership reached Rp 924.36 trillion while foreign ownership came to Rp 295.04.

Total ownership of shares was posted at Rp 2,216.35 trillion per June 2012; meanwhile asset recorded at C-Best (The Central Depository an Book Entry Settlement System) of the domestic sector reached Rp 1,115.68 trillion and foreign Rp 1,310.67 trillion. And Total Sub-account at C-Best reached Rp 365,602 in June 2012, up against June 2011 by 344,325 sub-account.

C-best was a system designed to replace the deposit and transaction system of security the manual way which could only be accessed by KSEI account holder. So the power of domestic capital market based on capacity of local capital should be an important part of effort to find solutions for Uni Europe crisis.

Shares of the consumer goods and property sector were rated by market players as most prospective in Semester II – 2012. Fundamental performance of emitents of the two sectors were predicted to be potentially increasing since people’s purchasing power was still relatively stable and consumption was well maintained.

Preference of most market players of shares of consumer goods indicated that market players realized there was still high risk in Semester II this made market players be moderate in choosing shares of defensive character.

In fact shares of consumer goods product still had the potential of conservative growth. In particular emitents relied more on selling price policy to make net profit because sales volume was a matured.

Meanwhile most of the shares in the property sector was still attractive. Investors could observe shares of emitents of the property sector, or industrial estates having wide areas and were continuously expanding whereby to increase income growth an net profit through Semester II.

Broadly speaking all shares recorded at BEI was relatively prospective for long term investment. For strategy of Semester II, the main risk to watch over by market players was volatility of oil price and price of global commodity which tend to increase. This was the kind of risk which would have its direct impact on shares of the mining sector and agri-business.

It showed that shares of the infra-structure sector and various industries was not preferred by market players who rated that majority shares were still rated as relatively cheaper. All in all there was notable preference for shares of the consumer goods and property sectors as there were expectations of high performance in those sectors.

Business News - July 11, 2012

No comments: