Through this week
moneymarket players in Indonesia would focus attention on macro-economic
development at home and global sentiments such as the political tension in
Europe. At home, the focus would be economic growth of Q II 2014 which posted
5.12% y o y slowing down against economic growth in Q I 2014 at 5.22% [y o y].
Realization of growing GDP was lower than BI’s estimate.
The slowdown was on account of contracted export growth
especially of nature based commodities. Export of some mining commodities were
halted due to Government’s regulation to restrict export of raw mineral ores,
while export of coal and CPO had to face low demand.
On the domestic side, slowdown of economic growth was on
account of contracted Government’s expenditure and non-building investments.
Suspension of social Aid Plan [Bansos] lessened purchases of goods for people’s
empowerment. This was one of the factors which caused contraction of
Government’s consumption.
Meanwhile negative non-building investment was due to
overseas transportation investment which was in parallel with low performance
of the mining industry.
Economic growth of Q II 2014 was sustained by strong
household consumption among others as impact of the General Election, as
indicated by bettered performance of F&B and paper industry, while
investment in construction was notably good. Meanwhile reduces import due to
moderated domestic demand helped to reduce external pressures due to lowered
export.
BI saw that slowdown of economic growth in Q II 2014 was
still in line with macro-economy stabilization process exercised by BI and the
Government especially to control inflation and deficit in current transaction
[DTB]. BI would constantly monitor various development, domestic or external,
and to make sure that national economic dynamics would go well in the future.
Meanwhile the euphoria over victory of Joko Widodo –
Jusuf Kalla candidate pair at the Presidential election only lasted for a
moment as the rival candidate pair Prabowo Subianto – Hatta Rajasa denied
defeat and sued the Election Commission before the Constitutional Court. IHSG
index which soared up to 5.150 slipped down to 5.090.
So before there was any definitive decision, the market
would tend to stagnate. According to the Law, the Prabowo – hatta team had the
right to bring the case to court within 3 days after the Election Commission
[KPU] announced the count outcome.
Many analyst said they would not expect the
Constitutional Court would make any decision which would change the overall
outcome of the Election. The claim triggered uncertainty but it was most
unlikely that it would change history.
Still some analyst were of opinion that the root of
uncertainty was support by the coalition parties on Jokowi-JK side which were
not in the majority position in House. Economist and analyst might fear
undesirable occurrences which might scrap managerial effectiveness of the
Jokowi-JK team when they are in office soon.
Meanwhile the Russia-Ukraina political tension was still
happening to give negative effect on the global moneymarket, which would even
bring negative effect on the local moneymarket.
The Moneymarket
During closing session last Thursday session last
Thursday [7/8] Rupiah exchange rate value against USD weakened to Rp 11,795 per
USD against that during market opening at Rp 11,750 per USD. Currency weakening
was not only happening to Indonesia but to other world currencies mainly due
anxiety over interest rate in USA being increased too soon.
Rupiah strengthened once more positive sentiment came up
such as impoevement of some indicators of Indonesia’s macro-economy. For
example bettered deficit ratio, controlled inflation and increased export.
Thank God the case of bond default in Argentine had no negative effect on Rupiah.
Rupiah was no predicated to be still weakening during
transaction on Friday last week [8/8]. External sentiments suppressed Rupiah
and other Asian currencies. Evidently Rupiah value against USD on [8/8]
weakened to above Rp11,800 per USD.
Economist estimated pressure on Rupiah would increase as
China’s trade balance, which was predictably bad, was released. Meanwhile USD
index continued to strengthen which would keep Rupiah down. Moreover the Europe
Central Bank [EXB] persisted to maintain ECB which made index of USD to
continue strengthening.
Moreover initial jobless claims in the USD which dropped
drastically was supportive to USD strengthening process this week. Still ECB
Governor Mario Dragi expressed his joy with Euro weakening trend this week but
was pessimistic about tomorrow’s economic faith.
Rupiah weakened together with other Asian currencies till
yesterday afeternoon. Increasing Dollar index would maintain sentiment of
Rupiah weakening in time to come. If China trade balance turned out to be bad,
it might increase pressures on Rupiah.
Rupiah vale was predicated to weaken in the range of
Rp11,775 – Rp11,875 per USD toward closing session last week [8/8] due to
uncertain political climate at home and strengthening USD abroad.
Through this week pressures on Rupiah was still not
cooling off especially as the market were waiting for the decision of the
Constitution Court in regard to election count outcome. Rupiah was predicated
to move in range if Rp11,800 – Rp11,900 per USD while BI would announce
realization of national forex reserves by week end.
If realization of forex reserves was in line with market
expectation, the implication on market was predictably positive. All in all the
Court’s decision was in line with market expectation, the implication was that
Rupiah expectation, the implication was that Rupiah strengthen to Rp11,500 per
USD.
The Capital Market
Last Thursday [7/8] IHSG managed to bounch back to the
green zone toward closing session after weakening all day. Act of share buying
by domestic investors was the catalyst. During opening session, IHSG slumped by
6.135 points [0.12%] to the level of 5,052.092 due to lack of positive
sentiment.
Act of selling had been going on since opening session.
This act pressed IHSG down to its lowest level at 5,043.525. Investors only
seek for miniung share, while shares of other sectors were still being
corrected. Premium shares was still the target of sellers. Index which once
rose to its highest level of 5,068 fell again to its negative zone.
During closing session, IHSG inched up by 8.751 points [0.17%]
to 5,066.978 while index of LQ45 increased by 1.125 points [0.13%] to the level
of 864.988. Domestic investors prevailed in acts of buying. Foreign investors
were seen to make foreign net sell worth Rp 231.9 billion in all of the market.
Transaction was running moderately with transaction
frequency of 246,955 times at the volume of 4,654 lots worth Rp 6.071 trillion.
147 shares increased, 136 shares went down and 82 shares stagnated. Meanwhile
most Asian stockmarkets were trapped in the red zone due to external geo
politic sentiment. Only Japan’s stockmarket settled safely in the green zone.
To continue process last weekend [8/8] shares in the Asia
Pacific region turned red during opening session, to continue weakening process
the week before. The weakening was affected by conflict in Ukraina. Index of
MSCI Asia Pacific inched down by 0.5% to become 145.35. In total, MSCI Asia
Pacific index had posted downturn of 1.6% last week.
Weakening of shares in Asia was made worse by political
tension in Ukraina. Russia launched a counter move to the sanction put on them
last week. President of Russia Vladimir Putin prohibited import of food coming
from the West. Besides marketplayers were also afraid that Russia might invade
deeper into Ukraina and they also feared that Russia’s economic sanction on the
West might bring worse impact on economic growth of European states.
Governor of Europe Central Bank Mario Dragi stated economic recovery in Europe might be
hard as US – Russia tension heightened. As Known Europe was America’s ally but
many European economic product were dependent on Russia as buyer.
In Asia’s stockmarket, market curve line was governed by
anxiety over world’s economic slowdown due to heightening tension in Russia.
All in all, index of Nikkei 225 slumped by 1.1% to 15,063.73. the shares which
took the lead in weakening were: Fast Retailing [1.41%] SoftBank [2.09%], Tokyo
Electron [3.47%], index Tokyo Stock Exchange Tokyo Price Index Topix at opening
weakened by 0.91% to 1,26.73. The sectors which took the lead in weakening were
electronics [1.27%], banking [1.36%] and transportation [1.02%].
On Thursday [7/8] index Nikkei 225 once inched up to
72.58 points to 15,232.327 whilst index of Hang Seng inched down by 196.57
[0/80%] to the level of 24,387.56. Index of composite Shanghai dropped by 29.80
points [1.34%]. Index of Staits Times inched down by 4.71 points [0.14%] to
3,315.52.
Meanwhile the US stockmarket crumbled down, taking index
of Dow Jones Industrial Average to its lowest level since April 2014. The
weakening was on account of heightening tension in Ukraina, seesawing with
better income data against lowered jobless claim in the USA.
Price of health treatment shares slumped by 1.2% as
indicated by Aetna Inc [AFT] which dropped by 4%. Tyson Foods Inc [TSN] dropped
by 2% as Russia walled out import of food from the USA and allied countries as
counter sanction imposed on Russia. Shares of 21st Century Fox
increased by 5% in response to upjump of turnover of 2014 from the film X-Men:
“Days of Future Past” Rio 2”
Index of Standard & Poor 500 inched down by 0.6%.
index of Dow Jones dropped by 75.07 points or 0.5% to 16,368,27. Around 6.2
bullion shares were trade as the US stockmarket inched down by 0.6% to become
6.8% above average in 3 month. To cope with political tension in Ukraina,
NATO’s secretary General Anders Fogh Rasmussen urged Russia to withdraw their
forces and stop supporting the rebels.
Russian armed forces were already along the Ukraina
borders, forcing America to warn of invasion risk. Russia’s President Vladmir
Putin retaliated to Uni Europe and US sanction to restrict import food from
unhospitable countries.
Still in the USA, data showed reduce number of applicants
for jobless aid last week. A Government report disclosed that American
companies had employed more than 200,000 workers last month. The market
responded well to the positive economic data; but as political tension bursted
out, the market found it hard to adapt.
A combination of internal and external political
sentiments were predicted to be still overshadowing local shares through this
week. IHSG was predicted to return to this consolidation phase. Investors were
advised to be careful in observing development of sectoral shares since
bettered emitent’s performance could be spoiled by negative news.
Last weekend [8/8] index was projected to move variedly
in the range of 5,050 – 5,100 with potential strengthening by some shares being
overbought. Through this week IHSG would still be consolidating in the range of
5,060 – 5,120 with chances to inch up if uncertainty eased. (SS)
Business New - August 13, 2014
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