Tuesday, 4 September 2012


The Money market

The value of Rupiah against USD was downpressed by 30 points last Friday morning (20/7) driven by crisis outspread in Europe. Value of Rupiah in inter-bank transaction weakened by 30 points to the position of Rp 9,470 against the previous Rp 9,440 per USD.

Rumors was that risk of bankruptcy that befell on Spain had magnified crisis outspread in Euro and the condition was one of the catalysts of Rupiah to be once again outpowered by USD. The fiscal problem in Spain was far from over and the Government must be responsible to help local banks in solving their financing problem.

Meanwhile economic data of the USA which was not so impressive forced to investors to invest their assets in USD because it was believed to be able to protect value. Investors were seeking for alternative investment which were safe from risky assets which jacked up demand for USD.

Data of US economy i.e. good sales of new houses showed positive result, which signaled economic recovery of the nation. Economic recovery of the USA built investors’ confidence which encouraged them to enter into risky assts in the emerging markets. Moody’s international rating agency which again put Indonesia’s rating at Investment Grade was an catalysts that Rupiah was in a stable position.

Previously USD exchanger rate value fell against Pounsterling and inched down against Euro last Friday (20/7) because weak US data caused suspended sanction on Euro currency. The news that unemployment claim rose energized poundsterling by 0.4% to become USD 1,5722 while Euro inched up to USD 1.2282.

The market’s sentiment heightened last week because data showed that mortgage in America was getting better. Meanwhile for the most part company’s profit had not done anything according to investors’ low expectation. USD value inched down by 0.3% to become Yen 78,59 and inched down to Swiss Franc 1.0074. Meanwhile USD slumped, more than 1.2% against Russian Rubbel at 31.83 due to oil price, Australian dollar inched up by 0,6% to become USD 1.0428.

From the above picture, Rupiah development this week was determined by external factor. However, investors must also internal factor where Bank Indonesia would be the focus of attention. It was believed that BI would still control Rupiah value against USD at home so the pressure would not be felt too hard.

The euphoria of crisis solution in Uni Europe was not materialized at operational level so investors were still pessimistic; a condition as such strengthened pressures of Euro against USD which had its impact on Rupiah.

Demand for USD increased once more after the International Monetary Fund (IMF) cut projection of US economic growth from 2.1% to become 2% as effect of downturing economy of Uni Europe and China. Meanwhile Indonesia’s projection growth was also slashed from 6.5% - 6.7% to 6.1% - 6.5%. It seemed reasonable that Rupiah value would still be slightly under pressure due to prevalent external factor so the range of Rp 9,450 – Rp 9,500 per USD was probable.  

The Capital Market

Index of IHSG and Indonesia Security Exchange (BEI) last weekend (20/7) was opened to strengthen, Index of BEI was opened to rise by 0.06 points (0.99%) to the position of 4,096.26. Indonesia’s stockmarket was predicted to continue strengthening; shares of the consumers sector could be a wise alternative.

During closing session on Thursday (19/7) IHSG rose by 14.561 points or 0.35% to become 4,096.196. Meanwhile index of LQ 45 strengthened by 2.216 points or 0.31% to become 700,124 Index of BEI was getting closer to 4,100 driven by strengthening of regional stockmarket. This was the impact of statement by Ben Bernanke, the number one man in the Fed, that chances were small that the US economy was going to fall into recession. In addition to that there were chances of new stimulus package, quantitative easing of the third phase being released, and positive financial report to be released in quarter two 2012.

At home in Indonesia, it was predicted that Indonesian emitents would book quarterly performance which was propelled by increased net profit of emitents of the banking sector in Indonesia who managed to make profit that grew by 25% - 27% through Quarter II 2012. Thanks to strong growth of domestic emitents, IHSG would predictably continue strengthening by end of July with the potential to rise to 4,200. For this week, the range of 4,100 – 4,250 seemed reasonable.

If index strengthened last week, it could be benefited by investors to realize profit so index could move in the range of 4,075 – 4,150. So far strengthening of IHSG had been going on for five consecutive days. Under such circumstances, some emitents of the consumers sector like Unilever, (UNVR), Indofood Success Makmur and Indofood CPB Sukses Makmur (ICPB) could be investors’ target.

Meanwhile other stockmarkets in Asia also strengthened. Many of released emitent’s report showed positive outcome. Index of Shanghai rose by 15.74 percent or 0.73% to become 2,184.84. Index of Hang Seng soared up by 319.17 points or 1.66% to become 19,559.05 Index of Nikkei 225 strengthened by 68.81 points or 0.79% to become 8,795.55. The development influenced IHSG ands BEI to continue strengthening and trying to return to the level of 4,100.

Until 09.30 wib the local stockmarket last week (20/7) was opened strong, following the regional stockmarket where the majority of shares were posting increase. IHSG inched up by 11.35 points (0.28%) to become 4,092.99.

The positive sentiment from the fact that companies in the USA and Europe had been able to make profit breezed out hope amidst negative sentiment from the threat of global economic slowdown. Investors were also anticipating release of emitents’ financial report of Semester I/2012. If companies’ financial performance were good, IHSG would move up.

The Wall Street stockmarket was signified by strengthening for there consecutive days, driven by strengthening of shares of the technology sector. Marketplayers were also expecting additional stimulus from the Government following weakening of USD. During financial reporting season this time, many emitents reported higher performance, better than market expectations. Even emitents like IBM, e-Bay and Qualcom revised their target performance this year to higher level.

Europe was slightly at ease while reports disclosed that emitent’s performance, although not soaring high, had surpassed market’s expectation. The factor that held back stockmarket’s movement was poor manufacturing data and employment data in addition to downfall of Morgan Stanley which made shares drop more than 5%.

Somehow America’s poor economic data made marketplayers expect for additional stimulus (QE-III) of the Federal Reserve Bank. Governor of the Fed, Fred Bernanke in his speech early last week promised to do that if deemed necessary. All in all, on Thursday local Time (19/7) index of Dow Jones Jumped up by 34.66 points (0.27%) to the level of 12,943.36. Index of Standard & Poor’s 500 rose by 3.73 points (0.27%) to the level of 1,376.51. Index of Composite Nasdaq strengthened to the level  of 23.30 points (0.79%) to the level of 2,965.90 points.

Now investors were focusing attention on two world’s figures. Firstly China’s Prime Minister Wien Jiabao who was a key figure in regional condition as observed by investors, who reminded that the weakening of employment projection and n\bad outlook of Asia’s corporate performance as the effect of crisis that befell on Europe.

Secondly, global investors were also waiting for further testimonial by Governor of US Central Bank Ben Bernanke. Previously Bernanke stated he would prepare a policy to stimulate market growth if the employment market was not getting any better. If the QE-III policy were released, supply of USD would abound which would bring positive impact on Asian currencies including Rupiah, as well as giving positive sentiment to the global stockmarkets, including Indonesia’s stockmarket.

Business News - July 25, 2012

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