Sunday, 12 January 2014


The Moneymarket

By end of 2013 Rupiah tend to ease fluctuation in Christmas season; only trouble was that Rupiah still sank deep to Rp12,250 per USD. All quite on the market front in the solemn air of Christmas and new year’s mood 2014. Even if it strengthened it could not be any stronger than Rp 12,000 per USD.

In the USA not too many positive data were noteworthy to be released this week. Last week end America already released data of GDP which was predicted at above 3.6% against previous revision at the same level in quarter III – 2013 which was the last revision.

The market had anticipated that US economic growth was above 3.6% since it was known that America’s economy was recovering. Evidently US economic growth was at the level of 4.1% in quarter III-2013. Early last week data was released of US consumers sentiment at predicted 83.5 against the previous 82.5. All would serve as positive sentiment to USD and negative pressure on rupiah. If released below that level it could pose as negative pressure on USD.

Toward year end, USD liquidity contracted and the space of curveline narrowed. Meanwhile from China there was no data worthy of release; the same was with Europe. Toward holiday season probably Rupiah movement would not be notable but the potential was still there to slump to Rp 12,250 per USD.

So this year 2013 was a hard year for Rupiah. Over the year Rupiah had been depreciated by around 25%. The culprit was condition of national economy which was not in good shape and made worse by the Tappering of issue by the Fed in the USA. Outcome of the FOMC meeting in December decided that Tappering Off would be exercised in January 2014 by reducing purchase of bonds worth USD 10 billion, and Rupiah fell to Rp 12,190 per USD.

Last week, USD strengthened to its highest position in past 5 years against Yen. This made shares in Japan’s stockmarkets to strengthen at year end. Last Thursday [26/12], USD was apprediated to 104.08 Yen, the highest position since 2008 when USD worth 104.71 Yen. Some brokers estimated that USD would continue to strengthen and could even reach 105 Yen per USD if unemployment in the USA was reduced. Besides investires would also monitor prices of consumers good in Japan as investors were expecting USD to continue strengthening.

At home Rupiah had sound back up by Government’ regulation to make it mandatory to use Rupiah as medium of payment. It was now compulsory for all transaction of goods and services in shopping centers at home to use Rupiah ad medium. To use foreign currency in transactions at the domestic markets was against Law no 7 year 2011 on use of currencies.

The Government was now focusing attention on the habit of using foreign currencies as payment in modern shopping centers., There were two regulations of the Ministry of Trade which strongly obliged transactions to use Rupiah as medium. There would be sanction for law breakers, from written notice to cancellation of business permit.

The Government would not tolerate shopping centers using foreign currency as medium of transaction. The Government would act firmly on these practices to protect Rupiah value. The two regulations referred to by Sri were : Permendag No. 70/2013 on the Guidelines on the Management of Traditional Market places, shopping centers, modern shops and Permendag no. 35/2013 on the exposure of prices of goods and services on price tags.

Article 12 of Permendag No 70/2013 stated that the price of rentals as referred to in agreements must be stated in Rupiah. Article 6 [1]. Article 6 [1] Permendag no 6 [1] year 2003 regulated sanctions to be put on traders and Article 6 [2] regulated prices of goods and services which must be quoted in Rupiah.

The Government only permitted transactions based on foreign currencies at international airports such as in tax-free shops in airports and not outside airport boundaries.

Indonesian businessmen had asked the Government to take action on transaction practices using foreign currencies in the domestic market. Government’s firm action comforted the market because to quote in Rupiah would also burden the businessworld. Fluctuation of Rupiah value in a situation where shop rents were quoted in USD burdened tenants in paying their rental fees.

Nearly 60% of malls in Jakarta quoted their room rents in USD. This burdened retail tenants heavily in times when exchange rate fluctuated like today. Increase of dollar-based room rents burdened retailer tenants heavily. Rupiah depreciation troubled the real sector even more as basic electricity tariff increased. From the above picture for last week till end of year Rupiah was predicted to be in the range of Rp 12,000 – Rp 12,250 per USD due to minimum positive sentiment.

The Moneymarket

Meanwhile index of IHSG during transaction on Tuesday [24/12] for two days before Christmas ended at 4,402.83 after inching up by 0.3% or 13.2 points. Foreign investors posted net sell of Rp 12.2 billion. Index managed to enter the positive zone once more toward end of trading session. The highest level was 4,206.64 and the lowest at 4,174.46.

Index of LQ45 rose by 0.7%, index of JII inched up by 1.1% and index of ISSI Minfra 18 rose by 0.8% and IDX 30 inched up by 0.7% Highest strengthening was in the various industry sector 2.02% followed by shares in manufacturing 1.03%. Worst weakening was in the trading sector 0.4% and financial sector 0.2%.

Generally IHSG was closed below 4,205. Acts of window dressing had not been visible. Generally index did not make it to be closed above 4,205 while regional index was fairly good. Index of Hang Seng was back on its up going track. Straits times index [STI] also broke through resistant 3,110. It was true that majority of sian stockmarkets strengthened during Thursday transaction [26/2]. Investors were optimistic about the prospect of global economy in line with US economic data.

Index of NIKKEI inched up by 0.9%; index of Shanghai inched down by 0.1%. Meanwhile stockmarkets of Australia, New Zealand, Hong Kong and Jakarta dropped. Some people were celebrating Boxing Day and Christmas. Index had support from data of order for durable goods which increased in November 2013. Meanwhile signals of business expenditure for capital goods was also showing highest increase for the past one year.

Data of US durable goods was showing upturn. Order for transportation equipments rise by 3.5% in November. Economic could only expect to increase by 2% while price of house in America in October increased by 8.2% against same period in 2012 while in September 2013 the increase was 0.5%.

Index of NIKKAI in Toyo continued strengthening toward highest level in the past 6 years. The record was attained after increasing in 4 transactions thanks to Yen’s weakening to 104.84 Yen per USD from the lowest level the week before at 104.64 Yen per USD.

Meanwhile Shanghai stockmarket weakened by 2,100 points after the Central Bank of China launched open market operations at the value of USD 49 billion early last weekend. Today the people’s Bank of China was having surplus of 1.5 trillion Yuan or 219 billion USD. This policy brought pressures on shares of the banking sector like Merchant’s Bank which dropped by more than 2% and shares of Minsheng Bank sinking by 1%. Investors were also responding to economic projection which reached 7.6%, exceeding Government’s target of 7.5%.

Index of Kospi inched up although only 0.1%. Index of KOSPI had rally in six last transactions toward highest level in the past month. Weakening of Yen triggered downturn in exporter’s share such as Hyundai Motor and Samsung Electronics respectively by 0.2%.

Meanwhile US stockmarkets ended up higher during Tuesday session [24/12]. Strengthening was in line with data of durable goods which was positive. Index of Dow Jones improved record of closing session after going up by 0.3% to 16,357.55. Index of S&P strengthened by 0.2% to 1,833.32. meanwhile index of Nasdaq inched up by 0.25 to 4,155.42. Index of S&P in Wall Street was jacked  by good performance of technology shares like Facebook Inc, Twitter Inc and Yahoo Inc.

In this month of December 2013. Index of S&P had rellied by 1.5% so it was positive for internet based shares. During Thursday session [26/12] after Christmas holiday could serve as evident that the shares would rally again during year-end session of 2013. Shares of Facebook under S&P had inched up by 0.16%. This increase made them one of the best players in December with 23% increase. The year 2013 had posted increase of 118%. Facebook shares had posted strengthening for over 52 weeks as highest increase of USD 58.58 per share. Shares of Yahoo Inc strengthened by 10% in 52 weeks.

The moment of New year was fading out, there were even worries toward year end 2013. How could they not worry because IHSG which was initially expected to break through 5,000 till end of year continued to slump even to below psychological level of 4,000 last August. Today index was not any higher than 4,100 – 4,200.

Ever since closing session a year ago till December 16, 2013 last, index was noted as falling by 4.42%. This indicated that index had arrived at saturated stage which means technically index had the potential to strengthen. Once index touched 5,274.98 for its highest level on May 2013 and fell to its lowest level of 3,967.64 on August 27 2013. Meanwhile, since early this month till December 16, 2013 index was noted to drop to 4.54%.

Weakening of IHSG was followed by depreciation of Rupiah to above Rp 12,000 per USD. Last week, players of the stockmarkets were anxiously waiting for the Fed’s action to launch Tapppering Off. If axing of stimulus were done this year, it would pose as negative sentiment to IHSG because investors would draw their fund out of Asia including Indonesia to America.

Somehow as time went by, anxiety over axing of stimulus was subsiding. Released US economic data had in spite of betterments, some factors were still below expectation, like unemployment which was expected to be at 6.5% no only attained at 7% and inflation target was 2 percent against the expected 2%.

Besides, some stockplayers believed that axing would not be done this year, in line with succession of the Fed Governor in the near future. Meanwhile, to look at index movement by sector, of the 9 sectors listed at BEI only 3 sectors were moving positively, while an other 6 sectors stayed negative. The consumers’ sector posted highest growth at 10.28% since closing of last year till December 2013. The sector posting lowest downturn was mining sector at 22.97%.

From the above picture, IHSG till end of this year was projected to settle in the range of 4,200 – 4,250 with tendency to inch up as foreign investors entered during Christmas holidays and New Year 2014.

Business News - December 31, 2013

No comments: