The Moneymarket
Outcome of the Meeting of the Board of Governors of Bank Indonesia last
week [7/3] which set BI benchmark rate at 5.75% was welcomed positively by
marketplayers. The decision confirmed that the course Rupiah movement would be
better while the stockmarket would be in good shape.
The only thing was, just as the way it had always been in week end
transactions, Rupiah exchange rate at the inter-bank forex spot market in Jakarta last Friday [8/3] was predicted to
be entering consolidation stage and tend to weaken. It seemed that sentiments
from Europe and Asia seemed to be advantageous to USD.
Rupiah predictable movement last week end with tendency to weaken was
among others triggered by sentiment from the Monetary Meeting of Bak of England
(BoE) who again announced the positive side of Poundsterling slump against
British economy. The weakness could help England on the export side. Therefore
Rupiah would tend to weaken although generally consolidated. Rupiah would move
in the range of Ro9,600 – Rp9,700 per USD.
Besides, President of the European Central Bank [ECB] Mario Draghi
stated that economy of the Euro zone would still be under pressure in Semester
I-2013. So Rupiah tends to consolidate while USD tent to strengthen. Draghi
also underscored that the bond buying program would only be activated if the
proposing country were willing to run the Austerity Plan.
However data of US economy was negative enough so the sentiment to the
market was neutralized. US trade balance was predicted to worsen to USD 42.8
billion USD against the previous minus USD 38.5 billion with increased
unemployment level. US unemployment claim was predicted to increase from 344
thousand to become 354 thousand.
Last weekend the market also had to face outcome data of stress-test of
the US banking sector which was predicted to be positive enough. On the other
hand, released data of Japan’s GDP was still weak, i.e. recession of -0.1% for
the final version; but data of Japan’s balance sheet was growing positively
from USD 100 billion to become 110 USD billion. The only thing was that data of
China’s trade balance which was predicted to worsen from USD 29.2 billion to
USD 8.8 billion USD.
Meanwhile Euro and Poundsterling was way behind USA toward the monetary
Policy Meeting of the ECB and BoE. The official confirmation that economy of
the Eurozone shrunk by 0.6% in quarter four resulted in 0.6% contraction for
the entire year 2012 became a focus of attention of the problem in the
17-nation block. Euro slipped to USD 1.2971 down against USD 1.3047.
USD also strengthened against Japanese Yen, traded at 94.04 Yen against
the previous 93.30 Yen. Greenbuk was helped by report of the ADP payroll
company who pointed out that the private sector had added 198,000 workers in
February, way above expectation. Workers Recruitment Figures brought hope that
report of non agro-payroll of February would at least show moderate employment
growth, although unemployment level was still predicted to remain unchanged at
7.9%.
So broadly speaking sentiments tend to be
toward strengthening of USD since Asian sentiment was negative. Moreover, data
of US non-far, payrolls was positive because they were predicted to rise to 161
thousand against the previous 157 thousand. As footnote, Rupiah value against
USD at the interbank spot market in Jakarta last Thursday[7/3] was closed to
stagnate at Rp9,695/Rp9,705 previously Rupiah exchange rate value which was
transacted in the morning session was still stationary at Rp.9,690 per USD.
The course of Rupiah value was less fluctuating
amidst waiting by market players for outcome of internal meeting of central
banks of Japan and Europe. Market players were expecting that the meeting would
bring follow up policy on monetary easing. The expectation was to balance up
negative sentiment as there was no meeting point in the search for solution of
US fiscal problem. Now appreciation for Rupiah was slightly held back with data
showing downturn in quarterly Australian GDP and prediction of unchanged
quarterly GDP of Euro states.
Meanwhile BI’s effort to prohibit banks to make
hedging transactions using non-delivery forward [NDF] at home and abroad to
bumper speculation against Rupiah was rated as satisfactorily effective. All
forex transactions must be of full delivery.
Other point being the marketplayers’ focus of
attention was result of BI RDG which again stipulated the maintain BI rate at
5.75%. Hence BI rate had been maintained at the same position since February
2012. BI rate was rated as consistently synchronous with inflation target of
2013 and 2014 at 4.5% =/ -1%. Indonesia’s economic performance was still good
in spite of signs of moderation in investment through quarter IV 2012.
BI still had to watch on inflation course
especially that triggered by volatile food. The point was that the inflation of
the past two months was notably high, i.e. 1.03% in January and 0.75% in
February. BI felt sure that with mix-policy of monetary and macro prudential policy and fostering sound coordination with
the government they would be able to meet inflation target and enhance external
balance in promoting sustainable economic growth.
Noteworthy was the change in the position of
forex reserves. In January 2013, Indonesia’s forex reserves dropped from USD 4
billion to USD 108.8 billion. In February Indonesia’s forex reserves still
slumped by USD 3.6 billion to become USD 105.2 billion. The way BI saw it, on
the external side deficit in current transaction was estimated to drop by
quarter I-2013. The reduced deficit of current transaction was supported by
increased export which tend to increase in line with better international
commodity prices.
Meanwhile import on non oil-gas commodities
tend to weaken amidst high import of oil-gas which needed to be watched on. On
the other hand, capital inflow in the form of direct investment [FDI] of
portfolio investment were still high amidst growing need of forex liquidity at
home, which was among others needed for importing oil gas.
Under the above circumstances national forex
reserves by end of February 2013 came to USD 105.1 billion or equal to 5.7
months of import and Government’s overseas debt payment and was still above
international tolerable level. According to BI, in February 2013 pressures of
depreciation of Rupiah eased down, putting Rupiah at the level of Rp9,680 per
USD.
Compared to initial position in early 2013,
Rupiah strengthened by 0.31%. The Rupiah stabilizing policy adopted by BI,
including the forex intervention mechanism and formation of Rupiah value
reference at the domestic market, was able to enhance market’s trust.
In addition to that, stability of Rupiah value
was also supported by entry of non residential fund to Rupiah instrument which
came to Rp27.6 trillion. In the future BI must continue to maintaining Rupiah
stability in accordance with national fundamental economy. The conclusion was
that for this week Rupiah exchange rate value for USD would be in the range of
Rp9,675 – Rp9,725 with tendency of consolidating.
The Capital Market.
Domestic market players rated that soaring
index of IHSG in early 2013 did not represent a situation to be anxious about.
Indonesia’s macro economy condition which remained relatively solid made IHSG
condition reasonable with potential growth.
IHSG performance early this year continued to
ascend, repeatedly breaking highest record in the domestic stockmarket, driven
by accumulated net buy by foreign investors. In January 2013 IHSG reached its
highest record of 4,465.48 points with total foreign net buy of Rp5.69
trillion.
All in
all IHSG had broken its highest record of all time driven by acts of net
buying. Second tier shares were investors’ target. Starting the first session
last weekend [8/3] IHSG was opened to inch up by 0.651 points [0.01%] to the
level of 4,825.334 as they were losing steam after soaring high in the past few
days. Index moved flat and fluctuative within narrow range.
Selective buying was happening in some tiers of
shares although acts of profit taking was overshadowing IHSG movement. Index
was still moving up and down between red and green zone. Until there were acts
of net buy of second tier shares, index directly broke through intraday high
record was of all times at the level of 4,848.549. Yet this record was only
recently broken when index broke through 4,835.069 As known premium shares were
the target of profit taking as they had risen high enough.
Premium shares were the target of profit
taking, holding back IHSG which was threatened to fall into the red zone.
Fortunately this process of correction could still be held back by second tier
shares. Evidently to end session on Thursday [7/3], IHSG was closed to move up
by 23.616 points [0.49%] to the level of 832.315.
IHSG position was the highest ever of all time.
IHSG recordwas latest posted at 4,824.683 after jumping up by 72.982 points
[1.54%]. BI’s policy who again decided to maintain benchmark rate at 5.75% was
responded positively by stockholders. Some investor rated that the maintained
BI rate indicated that inflation was under control and Indonesia’s economy was
predictably growing, so net buying was on the go.
Meanwhile Asian stockmarkets closed their sessions
the mixed way. Some Asian stockmarkets accumulated buying’s after Dow Jones
made their highest record. Index of Composite Shanghai inched down by 22.89
points [0.98%] to the level of 2,324.29. Hang Seng inched down by 6.40 points
[0.03%] to the level of 22,771.44. Index of Nikkei 225 rose by 35.51 points
[0.30%] to the level of 11.968.08. Index of Straits Times strengthened by 4.20
points [0.13%] to the level of 3,296.01.
Previously shares of the developing countries
dropped from the highest level in the past 2 weeks led by shares of emitents of
the technological sector, after Europe Central Bank decided not to change their
interest level as they felt that Italy’s economy was under threat. Meanwhile
shares of Brazilian emitents were closed to strengthen. The shares which
contributed to downturning index of MSCI Emerging Markets were Ayala Land Inc
and Samsung Electronics co.
On the other hand shares of OGX Petroleo &
Gas Participacoes strengthened in index Bovespa Brazil. MSCI Emerging Markets
inched down by 0.2% to the level of 1,057.92 in New York to end increase for 2
days. As known, ECB decided to maintain benchmark rate at 0.75%. Some parties
were expecting “extra aid” from ECB.
However, most of Asian stockmarkets being in
positive area could trigger IHSG to regain strength. The condition was driven
by data of US economy which was above expectation and the Fed’s statement that
US economy was showing signs of growth.
The Wall Street stickmarket inched up during
sessions on Thursday [7/3] to drive index of Dow Jones to once again hit the
highest record of all time. Market players were waiting for US employment data.
This was for the third time that Dow Jones ever broke a record. Together with
S&P 500 both had strengthened for 2 consecutive days. Index of S&P was
only 1% away from the all time top position.
During closing session, index of Dow Jones
inched up by 33.25 points [0.23%] to the level of 14,329.49 as latest record.
Index of Standard & Poor 500 increased by 2.80 points to the level of
1,544.26. Index of Composite Nasdaq inched up by 9.72 points [0.30%] to the
level of 3,232.09.
Positive sentiment of the USA nad Asia
stockmarkets had the potential to inject sweet surprise to IHSG during closing
session last week predicted to be stable in the range of 4,850-4,880. If target
were met, IHSG would move up this week in the range of 4,875-4,900. Technically
the market was embarking on an area of new high, with expectation of new
resistance ar 5,250.
However, investors were advised to keep watch
on emitents’ performance especially those who were export oriented. As known,
economic betterment in some export destination countries was not good enough to
enhance Govenrment’s optimist of export performance.
Export performance of 2013 would predictably be
the same as 2012 amidst global economic condition which was not fully
recovered. Export performance this year would be affected if global economy
changed for the better.
Other points to be observed was economy of the
Euro zone which in quarter IV last year contracted by 0.9% y o y or deeper than
the previous quarter which posted contraction of 0.6% y o y. Hence the Euro
Zone had posted contractions for 4 censecutive quarters and technically would
be entering recession times. So exporters should be extra cautious of emitents
whose export market was Europe-oriented.(SS)
Business News - March 13,2013
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