Thursday, 5 February 2015


External factor brought pressures on Rupiah and IHSG. Sound economic recovery in the USA brought appreciation to USD and all of the global currencies, which was also triggered by economic weakening in Japan, Europe and China.

Negative sentiment also came from the Central Board of Statistics [BPS] who announced November inflation 2014 at 1.50% highest inflation was posted in the category of transportation, communication posted at 4.2% - which was above the average of economic consensus of 1.2% - 1.3% only.

BPS also released trade balance of October 2014 at surplus of USD 23.3 million. Indonesia’s export was posted at USD 15.35 billion while import was posted at USD 15.33 billion. As footnote, last September trade balance posted deficit of USD 270.3 million which was deficit of the 5th months over the year.
Trade volume also posted surplus of 30.7 tons of which export was posted at 43.84 million tons while import was posted at 13.18 million tons. Surplus of non oil-gas trading which was USD 1.13 billion was higher than deficit in oil-gas trading at USD 1.11 billion. Deficit in oil-gas trading was still high, as high as USD 2.109 billion.

Accumulatively through January – October 2015 Trade Balance was posting deficit of USD 1.64 billion while trade surplus in non oil-gas came to USD 9.08 billion. BPS data served as guidance to marketplayers to consolidate when good news never came.

The Moneymarket

Rupiah value against USD weakened by end of session last Thursday [4/12]. Rupiah was depreciated by Rp.12,309 per USD [0.07%]. Over the week Rupiah fluctuated around Rp.12,300 – Rp.12,330 per USD. By opening session Rupiah already weakened by 0.07% to Rp.12,310 per USD never stepping out of the red zone.

During opening session last Friday [5/12] Rupiah was still continuing to weaken, after touching its lowest level in the past 5 years. Rupiah was open to weaken Rp.12,310 per USD and was predicted to move in the range or Rp.12,275 – Rp.12,325 per USD by last weekend [5/12].

For this week, Rupiah was projected to be in the range of Rp.12,265 – Rp.12,300 per USD. the sentiment came from share price reversal and expectation of US Economy recovery.

Looks like marketplayers were still fond of USD and it leads to recovery of US fundamental economy. So for the short term negative sentiment would affect Rupiah. Moreover by year end need for USD normally soared high for paying overseas debt.

BI believed that weakening of Rupiah had its positive side, it might strengthen Indonesia’s export. However, the weakening must not exceed certain limit. So it was right for BI coordinate with the Government to manage the case.

Now the Government’s biggest homework was to jack up export of manufacturing, so the advantage of Rupiah weakening for increasing export could be proven. As known, Rupiah was depreciated to lowest level against USD in the last 11 months. Rupiah was now at Rp.12,300 per USD, close to the condition of crisis in 2008.

Many economist urged BI to create new instruments to uplift Rupiah, this was necessary for short term solution and secure forex supply at home.

Five factors accounted for Rupiah weakening in the past few days due to external sentiment. Firstly the prospect of US economic recovery. Secondly, economic slowdown in China and Japan, and lately also in Europe, all caused USD and Japan, and lately also in Europe, all caused USD to strengthen against all currencies of the world. Hence it was not only BI who should take action, bit also the Government who should strive to strengthen fundamental economy.

Step one, fiscal restoration. Step Two: infra structure development. Step Three, corruption eradication. Step Four political and economical stabilization Step Five to continue Government Reformation for maximum efficiency.

Admittedly the effort of economic recovery would take time; but it was better to take action now instead of holding meetings and discussions the way it happened in the past Government. Considering that pressures on Rupiah would continue this week, BI’s intervention was still needed to prevent Rupiah from sinking any deeper. Moreover USD index kept strengthening as ECB launched new stimulus package.

Toward ECB Meeting, Euro was suppressed as investors were expecting extra stimulus in view of Euro zone data which was still bad, moreover initial job claims in the USA was predicted to to lessen.

So the plan of the Indonesian Government to release once again promissory notes of Yen domination called Samurai Bond in 2015 was worthy of appreciation because if offered muti currencies, expand investor’s base and diversify currencies, expand investor’s base and diversify currencies.

This time issuance of Samurai Bond was different because it was unguaranteed to seek for new investors base in Japan who had faith in Indonesian bonds. For safety sake there would be two portions taken guaranteed and unguaranteed.

The way it had been, the Government had been issuing guaranteed Samurai Bond in collaboration with JBIC because in spite of Indonesia being rated Investment Grade, risk was still there. Issuance of Samurai Bond, guaranteed or not guaranteed would be executed simultaneously but the instrument with JBIG guarantee would be more numerous than the unguaranteed to avoid risk.

The Capital Market

Index of IHSG by end of session at BEI last Thursday [4/12] was closed to inch up by 0.22% [11/12 points] to 5,177.16 while index of LQ45 inched up by 0.2%. as recorded 182 shares strengthened, 140 shares descended 86 shares strengthened, 140 shares not for sale. Foreign investors were seen to make net sell amounting to regular market to the amount of Rp.203 billion.

The agricultural sector rose by 1.89%, basic industry rose by 0,33%, consumption inched up by 0.15% and property up by 0,35%. The infra structure sector inched up by 0.3%, trading up by 0.11%, manufacturing up by 0.36% and mix industry up by 0.83%. some security agencies believed IHSG would be closed in the range of 5,150 – 5,200; strengthening potential would continue this week in the range of 5,200 – 5,250 being supported by prima donna sectors.

On the external side, strengthening of the US stockmarket generated positive effect on Asian stockmarkets which tend to be positive. During closing session last Thursday [4/12] index of Dow Jones weakened by 12.52 points [0.07%] to the level of 17,900. Furthermore index of S&P lost 2.41 points [0.12%] to the level of 2,071.92 and index of Composite Nasdaq was reduced by 5.04 points [0.11%] to the level of 4,769.44.

Previously Wall Street shares strengthened on Wednesday [3/12] where Dow Jones index soared high to the highest level as the Fed’s report showed US economy was growing positively. Index of Dow Jones Industrial Average rose by 33.07 points [0.18%] to 17.912,162 a record of consecutive closing; while S&P increased by 7.78 points [0,38%] at 2,074.33 the highest record.

Index of Nasdaq Technology Composite inched up by 18.66 points [0,239%] to 4,774.47. The Fed’s Beige Book Report stated that some regions of Central Bank District signaled optimistic message about the future’s economic prospect. The Fed saw many positive things in many different fields.

Some investors might buy shares in anticipating ECB meeting which had signaled possible extra stimulus Shared of Citigroup and members of Dow JP Morgan Chase increased by 1.6% and 0.8% respectively. Bank of America increased by 1.1%, Some oil-related shares were also seen to strengthen. ExxonMobile inched up by 0.8%, Schlumburger increased by 1.8% and ConocoPhillips increased by 2.3%. Abercrombie & Fitch, a teenage-orientated wear retailer increased by 3.5% as the 42 cent QW-3 profit exceeded analyst’s expectation by one cent.

As some commodities bounched up they brought positive impact. Not just that, expectations of upturn of China’s stockmarket, continued weakening of Yen, Australia’s bettered trade balance, and released Korea’s GDP contributed positive sentiments.

On the other hand Europe’s stockmarket which strengthened reversed to the red zone toward closing session. Marketplayers responded negatively statement of ECB President Mario Dragi sho said that he was making calculations and further discussions over the need for stimulus next year.

Naturally the statement was responded negatively as ECB was still hesitant to inject stimulus. All the positive sentiment from Halifax House Price England, lowering of yield of 10 year bond Spain, the unchanging stimulus policy of the BoE and persistent ECB rate at 0.5% was balanced by Mario’s statement.

Still from the USA, downturn of commodity prices made marketplayers do act of selling to bring US stockmarket down again. Not just that, marketplayers also responded Mario Dragi statement. Release of low initial jobless claims was overpowered by the negative response.

So wall Street was willow as Mario Draghy decided to inject monetary stimulus next year. Corrections in US stockmarket was not too deep, but evenly spread in all sectors. Seven out of ten in S&P fell into the red zone. Dragi admitted ECB stimulus would start in early 2015. It was not unlikely there would be extra stimulus, but Dragi did not mention specifically the time and place.

At home, BEI set target to enlist 32 companies making IPO in 2015. This was to compensate on failure to net 30 new emitents in 2014. So far there were only 20 companies playing in the stockhall. So there was still room for 10 companies to do IPO, The 10 companies planning to do IPO year might do it in 2015.

BEI would work rated Government’s determination to make Indonesia a world maritime axis would have positive impact on emitents specializing in shipping.

Oil-gas transporters from upstream to downstream could continue to step up their performance as emitents so their shares would be sought after by investors. Sea transportation was regarded as more efficient and suitable for Indonesia being an archipelago. (SS)

Business News - December 10, 2015 

No comments: