IN ADVERSE TIME, RUPIAH NOSE-DIVES AS IHSG CONSOLIDATES

Indonesia’s macro economy performance of Q-1 this year which was below the consensus of economists and stakeholders had been disappointing. As predicted, economic growth of Q-1 2015 slowed down.

The Central Board of Statistics (BPS) announced that Indonesia’s economic growth in the first 3 moths of 2015 was posted at 4.71% - the growth slowed down against same period last year (y o y) at 5.14% slump of 0.18% against Q IV/2014. (q t q).

According to BPS low performance in Q 1/2015 was due to low oil price, low export and economic slowdown in China from 7.4% in Q IV/2014 to 7.0% in Q 1/2015 and yet Indonesia’s export to China had a share of around 10%. Singapore’s economy also dropped from 4.9% to become 2.1% which contributed to Indonesia’s export slowdown.

On the production side growth was influenced by seasonal factor agro business, forestry and fishery which grew by 14.63% while in terms of expenditure it was due to contracted investment performance (minus 4.72%) and export (minus 5.98%).

The Indonesia economic structure spatially in Q 1/2015 was dominated by provinces group in Java and in Sumatra. The provinces of java contributed highly to national GDP, i.e. 58.30% followed by Sumatra 22.56% an Kalimantan 8.26%.

Indonesia’s economic growth in Q 1/2015 which was low had serious attentions by BI who would respond by issuing mix-policy to restore economy i.e. to uplift Rupiah value, benchmark rate, macro prudential policy, trans-institutional communication and coordination, and coordination with the Government.

BI’s policy mix was needed to anticipate external factors which influenced Indonesia’s economic growth. Economic development in the USA, Japan, Europe and China needed to be watched on because it would have effect on Indonesia’s export.

However, BI saw that today the macro economic condition and financial system was still under control. This was because in 2010-2012 there was super cycle by the time all commodity prices went up. However, today 8 premium commodities went down. If Indonesia failed to do down streaming of primary commodities or failed to diversify export market it would downgrade economic performance.

The Fed’s plan to increase Fed Fund Rate was still overshadowing because it would pose as obstacle to Rupiah strengthening and IHSG at the BEI Indonesia Security Exchange.

The Moneymarket

Rupiah was continuing downfall against USD on the third day. With reference to JISDOR Jakarta data last Friday (8/5) Rupiah nose dived to Rp.13.177 per USD or 0.85% against the previous Rp.13,065 per USD or 0.18% against the previous Rp.13,148 per USD.

Analysts had it that Rupiah dropped because of Vice President Jusuf Kalla statement which was not in parallel with market expectation. He said that he expected BI rate to drop for sake of economic growth. The statement had negative effect on Rupiah.

On the other hand USD was strengthening in line with bettered labor market toward release of non farm payroll data in April, It increased speculations of increased interest rate this year. Companies employed 228,000 staff in April according to analyst’s estimate surveyed by Bloomberg.

Increase of US economy allowed room for policy makers to increase bank interest, beating gold value because gold only offered profit by price increase. USD was gradually strengthening since early last week to reach its highest level at Rp.13,196 per USD moreover Janet Yellen had again mentioned about the plan to increase bank interest.

Index of USD which measured USD strength against six main currencies inched up by 0.60% to become 94,649. In new York, Euro dropped to become USD 1.1266 against USD 1,136; British Pound starling strengthened to USD 1.5258; Australian Dollar dropped to 0.7093 per USD against USD 0.7967.

Last week end, Rupiah was suppressed quite deeply against USD in respond to Indonesia’s economy which was predicted to be still slow was closed at around Rp.13,150 – Rp.13,200 per USD. Marketplayers needed Government’s assurance to keep their commitment to jack up infra structure building.

Nevertheless BI was still at stand by position at the domestic market to keep Rupiah from sinking any deeper and cause panicky among the people. BI must also watch on inflation rate 2015 considering inflation of April last which was quite high, i.e. 0.35% which made annual inflation to soar up to 6.79% (y o y). BI argued that inflation of April was not bad by monthly or yearly standard and was still within BI’s estimate.

It was right for BI to constantly observe various factors which caused inflation, such as world’s oil price development, adjustment to administered prices and Rupiah depreciation. To keep consumer’s trust from fading, considering that consumer survey outcome showed diminishing consumer’s confidence in April 2015 although still at optimistic level (>100).

Such was indicated by Consumers Confidence Index (IKK) of April 2015 which dropped by 9.5 points to become 107.4. weakening of IKK was due to downturn of the two components, i.e. Index of Today’s Economy (IKE) and Index of Consumer’s expectation (IEK) which was down by 8.6 and 10.3 points against the previous month.

Survey also indicated that consumers were expecting prices would increase due to increasing demand toward Idul Fitri. Heightening price pressures was predicted to happen to all commodity categories, the highest being transportation, communication and financial services.

Meanwhile for the next 6 months (October 2015) respondents predicted total savings would not be as high as the month before. Such was visible in index of estimated savings for the next 6 months: 127.5 down by 9.4 points against index of previous month. From the above picture Rupiah would predictably be under pressure until this week and was predicted to move in the range of Rp.13,150 – Rp.13,250 per USD.

The Capital Market.

IHSG index strengthened during opening session last Friday (8/5). Data showed index rose by 0.64% or 32.603 points to the level of 5,182,343. As noted 115 shares moved up 52 shares went down and 76 shares stagnated. The opening session included 658 million lost of shares at the value of Rp.547 billion.

By sector, 9 out of 10 sectoral index turned green. The mix industry sector to the lead and moved up by 1.73%, manufacturing rose by 1.33%; basic industry rose by 1.33%. Meanwhile the sectors that turned red were Construction down by 0.06%. LQ 45 shares that enhanced strengthening were PT Indocement Tunggal Perkasa Tbk (INTP), PT Unilever Indonesia Tbk, and PT Astra International (ASII).

Increase of index was also due to act of buying by domestic investors. Index was recovering from sharp correction over the past week. Finally during closing of Session 1 last Friday (8/5), IHSG inched up by 42.05 points (0.82%) to the level of 5,192.501. Meanwhile index of LQ 45 jumped up by 10.773 points (1.21%) to the level of 900.816. Nearly all sectoral index turned green except the Construction sector. Act of Buying by investors made price of shares to rise.

Today trading was running moderately with 107,128 transactions in 3,21 billion lots worth Rp.2,359 trillion. 141 shares rose, 109 went down and 76 shares stagnated.

Meanwhile regional stockmarkets were compact to move in the green zone. China’s stockmarket climbed highest in Asia (y t d) with growth of 27%. Index of Nikkei 225 rose by 111.40 points (0.58%) to the level of 19,403.39 Index of Hang Seng strengthened by 197.80 point (0.72%) to the level 27,487.77. Index of Composite Shanghai dropped by 51.66 points (1.26%) to the level of 4,163.88 Index of Straits Times grew by 16.70 points (0.49%) to the level of 3,449.48.

Shares which were top gainers were among others Unilevel, Indocement, United Tractor and Astra Argo while shares which were categorized as top losers were Samudra Indonesia, Lippo Cikarang, Mitra Energi (KOPI) and Centex.

The condition assured that IHSG was closed at around 5,180 – 5,230 during closing session last week end (8/5). If the supporting factors continued this week, IHSG could strengthen at around 5,225 – 5,600 this week. Moreover analyst and stockpplayers could cope with Indonesia’s less growth rate than the previous quarter, but they felt sure that Indonesia’s economy would elevate in the next quarter.

Confidence of most of the marketplayers was sustainer of the share market at home. Indonesia’s economic state was even at stable level so it increased investors’ confidence to increase their portfolio investment at home. And foreign investors again re entered the domestic market.

Now foreign investors dared to hunt for shares again after drawing their capital from the capital market. Premium shares had the potential to strengthen. Downfall of some highly capitalized shares in the past weeks lowered share price, such were the factors that drew investors back this week.

For example PT Adhi Karya Tbk (ADHI) who booked net profit dropped by 35.5% (y o y). based on Financial Report of Q 1/2015, the company only managed to pocket net profit of Rp.10.6 billion, a slump of 34.5% against same period of 2014 i.e. Rp.16.2 billion. All in all net profit of BUMN emitent dropped to Rp.5,90 against the previous Rp.9.01.

The downturn was in line with decreased company’s income by 13.2% to become Rp.1.24 trillion against Rp.1.43 trillion the year before. Meanwhile net income of venture with construction was Rp.2 billion against the previous Rp.1 billion gross profit after venture profit came to Rp.134.56 billion against Rp.132.41 billion. Adhi Karya’s profit was also reduced due to swelling company’s burden to become Rp.33.05 billion against the previous the previous Rp.14.2 billion. Total liability had increased to Rp.9.27 against Rp.8.7 trillion.

Declining performance was also happening to PT Wijaya Karya (Persero) Tbk, PT Waskita Karya (Persero) Tbk, and PT pembangunan Perumahan (Persero) Tbk. As a whole, four emitents booked total profit of Rp.177.6 billion in Q 1/2015. The amount dropped by 29% lower than profit of the four emitents in Q 1/2014 amounting to Rp.151.97 billion (growing by 16.4%) and in Q 1/2013 Rp.216.336 billion (growing by 66.39%).

Income of the four BUMN emitents was having slowdown in Q 1/10`5, i.e. only Rp.6,63 trillion or down by 8.27% against Rp.7.26 in Q-1.2014.

Emitents of the automotive sector felt the same, the automotive market was projected to drop by less than 10% to 1.1 million units till end of year. Toyota as market of automotive industry in Indonesia estimated car sales at national level would drop by les than 10%.

Last year car sales at national level was posted at 1.2 million units, this year down to around 1.1 million units. The downturn was visible in January-February sales which was below expectation. Besides the Government’s fund was not liquid to keep the economic machine to roll, not to mention Rupiah falling to above Rp.13,000 per USD, and commodity and minery prices falling down.

A condition as such made the private sector to be more reserved about buying cars and tend to wait-and-see before buying. However, there was hope when Government expenditure was liquid since May and April which was expected to jack up car sales in Semester 2 of this year. Since last March Government’s expenditure had been increasing by Rp80 trillion per month.

If Government expenditure kept increasing, automotive traders might be optimistic there would be sales increase in Semester 2, although not high enough to compensate on low sales of Q-1. Toyota Indonesia kept projecting 32.5% market shares like last year. In a weary market, Toyota kept making corporate act including launching of new products as planned.

To stimulated the market. Automotive traders offered help to consumers to have a new car at affordable price and help consumers sell their old cars through Swap Deal. (SS)

Business New - May 13, 2015