The course of Rupiah value and IHSG
index at the Indonesia Stock Exchange [BEI] over the week would be governed by
combined external and internal factors. On the external side, rumors about
termination of stimulus program in the USA seemed to fade out which would bring
notably significant sentiment on Rupiah.
On the internal side, BI’s policy to
run foreign currency auction and performance of emitents of the first semester
this year would inject better sentiment. Therefore Rupiah was estimated to
consolidate, while IHSG a chance to rebound
The
Moneymarket
Rupiah exchange rate value against
USD at the inter-bank spot market Jakarta last week [26/7] was predicted to
consolidate. The positive external sentiment made it hard for Rupiah to return
to the positive zone. Referring to the latest US data which was predictably
weak apparently it give negative sentiment to USD. Fore example, data of
unemployment claim in the USA was already predicted to increase from 334
thousand to 340 thousand. The same was with release of order of durable goods
which was predicted to slowdown from 3.7% to 1.3%.
Also released inflation data from
Japan which was predicted to increase. This could reduce incentive of Bank of
Japan [BoJ] to further ease their monetary policy. Therefore supposedly the
external sentiment was positive on Rupiah. Somehow it was still hard for Rupiah
to strengthen; because this week the market had important data which might
underscore the economic challenges faced by Indonesia.
On August 1 next data on
import-export would be released. Analyst and economists had it that it was hard
for the market to obtain fundamental data which were positive at home so it was
just as hard for the market to expect Rupiah strengthening although the USD was
weakening. Last week end, Rupiah was consolidating in the range of Rp10,150 –
Rp10,250.- per USD. As footnote, Rupiah value against USD at the inter-bank
spot market Jakarta last Thursday [25/7/] was closed to weaken by 10 points
[0.09%] to the position of Rp 10,260,-/Rp 10,275.
It regard to market’s anxiety over
some US data which were positive and might lead the Fed to reduce their
stimulus Rupiah weakened by 25 points to become Rp10,275 against the previous
Rp10,250 per USD. Weakening of Rupiah was due to growing anxiety over mortgage
sales in the USA which was positive and might drive the Fed to reduce their
stimulus.
The Fed would respond to data to
determine whether to increase or reduce bond buying’s. Over the week
marketplayers would focus on ASN economic data and the plan of quantitative
easing by the Fed. At home BI to lessen intervention on Rupiah to lessen
capital outflow.
Besides, Rupiah motion was still
overshadowed by weakening of some Asian currencies against USD. Slow recovery
of the manufacturing industry in China and some countries tend to put Rupiah in
the negative zone. One thing was sure Rupiah’s position was on the bottom line
once more, the lowest in four years or since September 2009.
Rupiah step-down had been going on
continually over the past 10 days since Friday [12/7]. BI suspected around 15%
of private oversea debt held high risk as they were not hedge-protected. This
statement triggered negative sentiment in the market about Rupiah although BI
warned business players who had overseas debt to be careful about monetary
exchange rate by doing hedging.
BI’s data had it that Indonesia’s
total overseas debt by end of May 2013 came to USD 258.5 billion of which the
private sector’s debt constituted USD 31.55 billion. Around 67% or USD 73.66
billion of overseas debts were in USD. Meanwhile total overseas debt of the
private sector due by June – December 2013 came to USD 24.17 billion or around
18.37% of total private debt.
Natural hedging was exercised
without using monetary instrument or derivatives. One of the models of natural
hedging was to have income in the same denomination as forex debt. Meanwhile
hedging through various financial instrument were in many forms like fixed
contract, swap, and option. One of the instrument, FX Swap by auction today was
being developed by BI.
BI rated that Indonesia’s rating of
stable must be maintained through coordinated policy with the Government.
Governor of Bank Indonesia Agus DW Martowardojo said that the rating was
obtained from Japan Credit Rating Agency Ltd [JCR] who maintained Indonesia’s Sovereign
Credit Rating at BBB-/stable outlook.
Japan Rating Agency recommended 3
key factors to support their appraisal. Firstly sustainable Indonesia’s economy
supported by strong domestic demand. Secondly, low public debt as result of
prudent fiscal management. And thirdly, resistance to external shocks.
Affirmation of Indonesia’s rating by
JCR proved that Indonesia’s economy was relatively stable amidst global
economic slowdown full of uncertainty. The momentum needed to be maintained
through coordinated action between the Government and BI so healthy economy
could be well maintained and better rating could be attained
To strengthen Rupiah, BI admitted
they were probing on the possibility of Foreign Exchange Swap [Fx Swap] more
than once in a week as they were highly enthusiastic about stabilizing Rupiah.
The FX Swap more than once in a week could be solution to excessive demand for
foreign currency in the market whereby to reduce pressures on Rupiah.
The monetary instrument [Fx Swap]
was needed by investors as it might be used to create a good condition for
investors or forex owners. Besides, auction of Fx Swap could bring better
assurance to forex owners. If forex owners released their fund now, in the next
three or six months they could obtain foreign currency based on agreed price.
This auction of Fx Swap was part of
the policy mix run by BI with three objective. Firstly it was part of monetary
operations run by BI for managing forex liquidity and Rupiah in the market.
Secondly it was meant to be hedging for investors and business people against
the risk of Rupiah fluctuation as related to need for liquidity of forex and
Rupiah. Thirdly it was one of BI’s effort to enhance in-depth market probing
through efficient and transparent pricing. Besides the Fx Swap was optional
instrument so the market did not have to solely depend on cash market probing
through efficient and transparent pricing. Besides the Fx Swap was optional
instrument so the market did not have to solely depend on cash market in
managing their liquidity.
As known, BI on July 18 last had run
Swap of foreign currency auction at the spot market to the amount of USD 600
million with return tenure of one month, two months and three months. Twenty
banks participated in the Fx Swap based on exchange rate of Jakarta Interbank
Spot Dollar Rate [Jisdor] worth Rp10,056 per USD. The total transaction of the
Fx Swap jumped up to USD 1.24 billion, but BI only absorbed USD 600 million,
specified as USD 330 million with tenure of one month and the rest tenure of
six months.
Weakening of Rupiah was inevitable
because of the US Quantitative Easing Plan of the monetary stimulus which had
its impact on USD strengthening resulting in currency weakening in many
countries. Nevertheless BI urged businesspeople not to take advantage from
Rupiah weakening as it involved risk, so risk management should be observed
instead of just making profit from Rupiah weakening as it might incur loss.
Meanwhile Japanese Yen was
strengthening against some of the world’s leading currencies. Victory of the
Japanese Democratic Liberal Party led by Japanese Prime Minister Shinzo Abe at
the High Assembly election in Japan, jacked up strengthening of yen. The
USD-JPY exchange rate weakened by 0.72% to become 99,93; EUR-JPY weakened by
0.36% to become 0.36% to become 131.79 and AUD-JPY weakened by 0.44% to become
91.9130 against previous day.
Supposedly victory of the Abe’s
party enhanced Yen’s weakening; however, because at the same time USD was also
under pressure due to uncertainty of the QE monetary stimulus plan by the Fed,
so weakening of Yen was interrupted. The market who was disappointed by
indecisiveness of the fed about QE monetary stimulus causes heavy pressure of
USD including pressure by Yen,
Yen was also sustained by technical
factor due to weakening [of other currencies] recently. Strengthening was also
happening as equilibrium was arrived at between Yen’s exchange rate value and
Japan’s economic recovery which was now underway. However the character of
yen’s strengthening might change, being influenced by release of US mortgage
sales data in June which was predicted to increase.
BI’s effort to maintain Rupiah
stability was handicapped by high import of food for domestic need as economic
structure was not reformed yet. And yet on the other hand, high inflation was
also threatening, among others due to limited capacity of supply of volatile
food.
Today import was greater than
export, so Indonesia was now in a condition of “spending bigger than income”.
Such was actually disheartening because the problem was structural. So it was
hard for BI to struggle alone to overcome Rupiah weakening, since Rupiah had
been weakening since deficit in current transaction had been going on for seven
quarters. Each year import grew bigger. So naturally weakening represented
fundamental economy. Therefore projection of Rupiah exchange rate value in the
range of Rp10,100 – Rp10,250 seemed reasonable and rational.
The
Capital Market
Last week end [26/7] IHSG was opened
to strengthen by 0.16% to the level of 4,681% followed by index of LQ45 shares
by 0.19% to the level of 780.63. Index of JII shares strengthened by 0.12% to
the level of 157.86. The shares sector strengthened, among others infra
structure strengthening by 1.05% to the level
of 1,031 followed by the mining sector which strengthened by 0.37% to
the level of 1,347.53 and the finance sector strengthening by 0.27% to the
level of 595.09.
IHSG was predicted to continue
correction especially when Rupiah exchange rate again slumped. Besides,
correction at the bind market continued.
Sentiment in line sector would specially have negative sentiment in line
with significant correction on CPO Malaysia in the past 3 days.
A day before [15/7], driven by
negative sentiment which was still strong, IHSG was closed to drop by 43.99
points or 0,93% to the position of 4,674.12. Meanwhile index of LQ 45 weakened
by 10.27 points [1.30%] to the level of 779.08. Weakening of index was due to
sentiment from the Fed’s plan to reduce stimulus this September. The anxiety
was due to sales of new homes in the USA in June which reached highest level in
the past 5 years. Such indicated construction of residential areas would jack
up us economic growth in the second half of this year.
At home, pressures on index also
came from Rupiah exchange rate value was still restless. It was projected that
last week end [26/7] IHSG would fluctuate with tendency to weaken moderately in
the range of 4,650 – 4,700. One of the catalyst factor was report of financial
report of emitents of Semester I this year.
Meanwhile at the regional
stockmarket index of Hang Seng once weakened by 67.97 points [0.31%] to the
level of 21,900.96. Index Nikkei-225 down by 168.35 points [1.14%] to the level
of 14,562.93 and Straits Times weakened by 34.28 points [1.07%] to the position
of 3,239.15.
What the market focus their
attention on was BI’s decision to increase BI arte which was perceived
variously. Many were disappointed but there were even more who were delighted.
There were disappointed because increase of BI rate was not the best option to
counter USD strengthening against Rupiah.
But there were those were happy,
les’s say the managers of the Dapen Pension Plan with increase of BI rate by 75
basic points to become 6% they now could enjoy high interest rate, even above
the interest rate of the Deposit Insurance Agency [LPS] which today was at the
level of 6.25%. Moreover at the time when the condition of other instruments
like Reksadana were in a disadvantageous condition.
Now there were more and more pension
and insurance agencies who shifted their fund to conventional investment like
fixed deposit and bonds, there were even banks who offered interest above BI
benchmark rate. Depenso and Jamsostek had their different ways. This workers
insurance agencies prepared fund of Rp45 trillion to be invested in bonds.
Today around Rp46 trillion or 40.29% of fund was invested by Jamsostek in
bonds, only 31.42% was invested in fixed deposit.
With increased bank interest rates,
yields of bonds were soaring up accordingly, this yield was predicted to increase
again in 2014. At the time there were more than Rp32 trillion of bonds which
were due. Normally, to settle funds due the Government or corporate would issue
new bonds with high incentives. Naturally, the bonds to be chosen by Jamsostek
must meet certain criteria like A grade at minimum.
Accordingly, over the week IHSG was
predicted to strengthen moderately. Investors were advised to buy premium
shares and be domestic-oriented since consumption level was still high.
Besides, highly capitalized shares ware also attractive targets to hunt as they
had strong resistance against the effect of economic slowdown.
Financial report of the first
semester this year was released, so the people tend to wait till all emitents
were ready could serve as positive catalyst to portray strengthening of index,
because performance of big emitents were able to meet market expectation. In
general financial report of highly capitalized emitents already reflected
stability of quarter I-2013 which rated tend to be stable and continue in
quarter II-2013.
The only thing was that amidst
threat of increased bank rate due to high inflation, business of property
emitents was apparently still promising. The success of some property emitents
to enhance presales, which was real income to the company, would at least build
confidence among developers about their performance till end of year.
For example, developers at the
Kelapa Gading District, PT Summarecon Agung Tbk [SMRA] which had reaped sales
worth Rp2 trillion in the past 6 months. This positive performance was
attributed to project of Kelapa Gading, Summarecon Serpong and Summarecon
Bekasi. Nearly 50% or around Rp1 trillion pre-sales was made by the summarecon
Kelapa Gading only contributed around Rp500 billion, the rest obtained through
sales of project in Bekasi.
The same was experienced by PT Bumi
Serpong Damai Tbk [BSDE] which by up to Semester 1 this year succeeded in
making sales of Rp4.19 trillion. This income was a growth of 79% compared to
marketing sales of the same period last year, i.e. the company only made sales
of Rp2.35 trillion.
Project wise, BSD City as flagship
project of the Sinar Mas Land were the main contributors in obtaining sales
till Semester I this year, i.e. 82% while Kota Wisata was the second biggest
contributor with 7% while Grand Wisata Bekasi contributed 5%, etc.
Meanwhile PT Sentul City Tbk [BKSL]
projected to make pre-sales of Rp720 billion till Semester I this year. This
amount was double the amount of the income during pre sales of the same period
last year, i.e. Sentul City only succeeded in making Rp300 billion. This
positive performance was the fruits of jacking up sales of landed houses
sector, apartments and commercial project.
Business New - July 31, 2013
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