Monday, 3 June 2013


The Moneymarket

It never occurred to anyone that crisis in Greece would drag France down the ravine of crisis. This would cause Rupiah value against USD at the inter bank spot market Jakarta on Friday last weekend (7/12) was predicted to weaken. One of the reasons was that the market was worried about the recession signal from France.

Although the Bank of England (BoE) and Europe Central Bank (ECB) had predicted to maintain their interest rate yesterday, the press conference of ECB was not too heartening. Europe Central Bank underscored the poor outlook of Europe’s economy in quarter IV-2012, therefore Rupiah tends to weaken in the range of Rp 9,620 to Rp 9,660 per USD.

However data of unemployment in the USA was positive enough to sustain performance of USD. Moreover the sentiment in Asia was still negative with released Australia’s trade balance which was predicted to worsen to the range of minus AUS 2.15 billion against the previous minus AUD 2.15 billion against the previous minus AUD 1.46 billion.

In Europe, the market saw the possibility of worsened budgeting of the Government of France. The market was worried about the ability of the French Government in axing their fiscal deficit of the Government in axing their fiscal deficit to the ideal 3% of GDP. But target of the fiscal deficit of the Government of France in 2012 was at the level of 4.5% against 5.2% in 2011.

The problem was, target attained or not, considering the economy of France and hardly signaled any sign of growth in three latest quarter, the situation was quite a suspense. Moreover the Central Bank of France had signaled the threat of recession in that country.

In fact the market was quite optimistic about liquidation of the next bailout fund for Greece as decided in the Euro Group Meeting. This week, especially when the buy back plan for Greece bonds appeared quite impressively in the market. The market was also quite sure that the Euro zone would do anything to maintain Greece’s status as member of the Euro zone. Moreover the Europe Central Bank (ECB) also maintained benchmark rate at 0.75% last Thursday (6/12). The level was the lowest record as long as the region was having financial crisis. ECB post posed further economic policy, waiting for the right momentum to buy bonds.

RCB wished to keep benchmark rate low in Europe. The objective was to down press soaring bonds returns of Uni Europe countries. Although not bluntly stating to buy bonds of Spain’s Government, the decision about interest rate was for the fifth time so the interest rate of fixed deposit rose from 0,0% and emergency credit interest rate at 1.5%.

Somehow Rupiah weakening would not be to deep considering that the market was still in wait-and-see position about the released US payroll non-farm data. The figures were predicted as negative because there was only an increase of 96 thousand or lower than the previously publicized 171 thousand. If data of US nonfarm payrolls weakened it would make the market to expect a more aggressive US monetary policy from the Fed during this week’s meeting. (13/12)

As footnote, Rupiah exchange rate value against USD during transaction on Thursday (6/12) was closed to weaken by 10 points to the position of Rp 9,615/Rp 9,620. The market was hit by heightened sentiment from Europe as Greece’s rating was axed, Finland under recess and economic outlook was gloomy in England. Panic heightened as news spread out that France was on the brink of recession.

Rupiah weakening was triggered by worsening sentiment from Europe. Among them was bad news from Europe as Standard & Poor’s rating agency demoted Greece rating from CCC to SB. This S&P rating worsened sentiment as British Finance Minister George Osborne gave disclosed unimpressive outlook of British Economy.

As for the year 2012 England’s economy was predicted to contract by -0.1% for 2013: but the figure was lower than the previous estimate of 0.8% for 2012 and 2% for 2013. British Finance Minister would also postpone axing of fiscal deficit.

The condition was a hard blow to market sentiment. At the same time Finland was the next country in the Euro zone which fell into the recession cliff after market sentiment turned negative in two consecutive quarters. In quarter III-2013 Finland’s GDP was minus 0.1% against the previous quarter 1t 0.3%.

Besides, US data was positive enough to uplift performance of USD. Index data of ISM Non Manufacturing (the service sector) was positive enough at 54.7 against the previously published 54.2. The same was with factory order which rose to become 0.8% against the predicted 0% and the previous 4.5%. This was better than analyst and economist prediction but weakening of Rupiah was accompanied by bettered sentiments in Asia especially with New Zealand’s effort to hold their benchmark rate at 2.5%.

The same was with employment data of Australia which turned better. Unemployment level in Australia fell from 5.4% to 5.2%. The number of labor force in Australia also increased to 13,900 against the previous 10,200 and of predicted 200 new workers.

One of the negative sentiments probably came from the USA as President Barrack Obama signaled the difficulty to solve the fiscall cliff which would accommodate Congress’s wishes in Washington. Therefore negotiations over the fiscal cliff would continue till early next year so the market was worried about the side effect. From the above picture, apparently this week Rupiah value was predicted to fluctuate in the range of Rp 9,625 - Rp 9,655 per USD with tendency to weaken.

The Capital Market

The same was with Rupiah value which was under pressure, the security exchange at home was under heavy pressure Index of IHSG during early transaction last weekend (7/12) was opened to weaken. Lack of positive sentiment which would move index was the catalysts.

During re-opening session IHSG weakened by 6.417 points (0.15%) to the level of 4,286.168. The same was with premium shares LQ 45 which dropped by 1.639 points (0.23%) to the level of 726.438. On that day IHSG was predicted to move the mixed way as there was less positive sentiment strong enough to jack up index. The span of BEI index was estimated to be at the level of 4,275 - 4,325. Meanwhile downturn of economic projection of Uni Europe was predicted to be negative sentiment especially to commodity-based sectors.

Meanwhile US stockmarket was closed stronger in spite of weak opening after ECB lowered projection for Europe’s economic growth to minus 0.5% in 2012, minus 0,3% in 2013 and minus 1,3% in 2014. The US stockmarket was closed stronger in line with rebound of Apple Inc shares and release of jobless claim data better than expectation. Price of oil was correction by 1.8% to the level of USD 86.3 per barrel in line with lowered economic projection in Uni Europe and followed by majority of world’s metal price. In Asia stockmarket, transaction was opened slightly stronger thanks to positive sentiment and release of US jobless claims initial data and anticipation of released employment data of the USA.

Previously during transaction on Thursday (6/12) IHSG was closed to inch up by 5.7 points or 0.1% to 4,292,60 Foreign investors were having net sell of Rp 171.5 billion. Trade volume came to 6.1 billion worth Rp 6.2 trillion. 138 shares were notes to strengthen, 131 shares weakened and 104 shares were stationary. Index could not maintain significant strengthening due to pressures toward end of session.

Index of JII rose by 0.1%, index of LQ45 premium shares rose by 0.05%, index of ISSI rose by 0.35% and IDX30 dropped by 0.05%. Strengthening of index was supported by share of the property sector 1.1%, followed by shares of the consumer’s sectors 0.8% but strengthening process was held back by the financial sector which weakened by 0.3% and shares of the plantation sector 0.4%.

Foreign investors were in no condition to make shareholders happy. Since early session they had taken the net buy position at the regular market, but in the past few minutes were in the net sell position although it was near closing session.

In fact there was nothing to worry about local stockmarket index except for the impact of crisis in Europe which seemed never finished. It seemed reasonable that IHSG during last week end (7/12) would test a resistance level of 4,315 - 4,325. One thing most heartening was shares of the coal sector which were closed positive.

Upon entering this week, IHSG was predicted to continue technical rebound that occurred last weekend. At home, the market was not trouble by big problem. Still the world was keeping watch on the global factor in line with the fiscal cliff in America at year end and the debt crisis in Europe.

In America, rejection of the Republic Party to President Obama’s plan to increase tax of the rich had made the global and regional stockmarkets to turn hectic. Index of Dow Jones and Nasdaq in Wall Street which were the world’s reference again moved down by 0.11% and 0.18%.

Some analysts predicted the fall of Dow Jones and Nasdaq indices would continue. The point was that the Republic Party had asked Obama’s administration to axe state budget more to overcome fiscal cliff. John Boehner, chairman of the Republic Party said that this way could save spending up to USD 2.2 trillion. This figure was bigger that of tax income.

Boehner was probably right. The problem was that austerity plan might drive America to deeper recession and the impact would be felt all over the world. As known, America was the market for product of some countries including Indonesia. If the recommendation of the Republic Party was accepted. It was almost certain the domino effect would spread out worldwide.

However if America could find a solution to troubleshoot their fiscal cliff problem, IHSG stand a change to overshoot the resistance level of 4,350 and re open the potential to soar up to the highest level in history. The resistance target was inclusive of window dressing effect. There was indeed hope to reach 4,400. The only thing was, to consider the lurking sentiments like the US fiscal cliff and New Year was just days ahead, it seemed not easy to reach that level.

The point was that every at act of accumulated buying of a certain blue chip share would be followed up by profit taking. This was the factor that kept index from moving up faster. Therefore technical and fundamental mix was important to be done to watch the course of a share. However shares of the construction sector finally could keep index from sinking any deeper. Besides, window dressing was something commonplace during year end in the effort to lift up bargaining position in emitent’s performance so index would remain to be high by end of year.

The only thing was that by early year it might happen that profit taking might again prevail of the US fiscal cliff failed to find evolutions. Therefore the January 2013 might always happen; investors were taking stance to wait for third or fourth week of January 2013 to make a bargaining position toward consolidating their portofolio.

Besides the fiscal cliff issue, labor union’s demonstrations to demand increase in provincial minimum wages (UMP) might have a negative impact on shares transaction at the stock market. Therefore this week IHSG was predicted to move in the range of 4,275 - 4,325. Understandable because shares of leading banks were being selling pressures as Bank Indonesia (BI) lowered credit target of national banks this year. Second layer shares in the mix-industry sector were also being avoided by investors.

Moreover shares of the CPO producers sector were predictably still be under pressure as global demand had not turned normal and had the potential to interrupt emitent’s performance. Price of CPO for contracts in January 2013 during transactions two weeks ago tend to be volatile. Closing price of CPO in November 2012 was posted at USD 682 per ton, and yet only a week before it was USD 703 per ton. The price was way below average price on year-to-date basis at USD 829.62 per ton and the highest price level once reached USD 976 per ton. 

Business News - December 12, 2012

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