The drama of Greece had
entered a new phase which relieved the whole world. The threat that Greece had
to exit from the Eurozone had gone as Greece came to terms to receive bailout fund
from Troika and other creditors. This would open a niche for the global
moneymarket including the emerging economies to revitalize.
Again Greece had made in important decision to secure
bailout from creditor countries as the Greek Parliament agreed on a second
Reformation. By this policy, the negotiation for bailout worth €uro 86 billion
was over. The Reformation brought change in Greece’s banking and legal system.
Previously there was growing anxiety of Parliament’s
rejection of the policy, but Prime Minister Alexis Tspiras had managed to
gather enough support he needed. In the referendum 230 votes supported the
proposal, 63 were against it and 5 were abstain.
Among those who rejected, 31 of them were from the Syriza
Government Party. Somehow the figure was less than the previous voting. Ex
Greek Finance Minister Yanis Varoufakis who previously refused the deal, now
preferred to support the Government.
Tsipiras stated that he was not happy with the condition
set by the creditors, but he had to compromise to avoid an extreme
circumstance. Meanwhile representatives of institutions in Europe who provided
the bailout fund were negotiating in Athens.
The deal approved by the Parliament of Greece were more
of a structural policy aimed at accelerating court cases and adoption of Uni
Europe regulations to jack up the banking sector and to protect customer’s
fixed deposit account worth less than € 100,000.
PM Tsipiras was
also consolidating the Syriza Party before voting was run in Parliament in regard
to the second package demanded by international creditors. Tsipiras had to face
hard critic from the left wing party that he led.
Greece received a package deal theough Parliament’s
approval supported by some pro-Europe parties whereby Greece was entitled to a
new loan worth € 86 million. besides Greece was also allowed not to exit from
Euro exchange rate value if they signed the package deal.
In Indonesia, marketplayers were also observing the
latest macro economy development, especially economic growth projections. BI
was pessimistic economic growth by year end would be as high as past
predictions.
Indonesia’s growth rate in the second half on this year
was around 5% - 5.2%; the monetary authority estimated economic growth in the
second half of this year at around 5.3% - 5.4%.
Lowering of growth projection was in line with that of
Q-2. Initially BI was optimistic to score 4.9%. now must be content with 4.7%,
the same level as in Q1.
In short, this year Indonesia’s economic growth would
only grow by around 5% - 5.4% depending realization of budget realization and
realization of infra structure projects.
Realization of Government’s budget could increase
investment and domestic consumption while BI had not relaxed their monetary
policy as the global condition was not as yet to recovery. BI also realized the
LTV value but the result could not seen until Q IV/2015.
As with Government’s budget absorption, the amount
realized was Rp.820 trillion or 41% of total allocation in APBN-P 2015.
The Moneymarket
Regional currencies including Rupiah weakened as US
economy turned better. The market tend to wait and see as Janet Yellen made her
statement at FOMC this week. At the spot market last Thursday (23/78) Rupiah
was seen to weaken by 0,34% to Rp.13,420 per USD. Accordingly BI’s mid rate
inched down by 0.19% tp Rp.13,394 per USD.
Rupiah weakened as there would be FOMC statement this
Thursday (30/7), moreover the Greece crisis was over. The market would be
governed by Janet Yellen’s policy as Governor of the Fed. On Wednesday (22/7)
there was positive data on sales of second hand homes.
Besides, expectation of unemployment data in the USA
dropped to 279,000 from 281,000 which caused some regional currencies to weaken
including Rupiah. At home Rupiah ran short of positive sentiment and over the
week Rupiah value had been governed by falling international commodity prices.
Last week end (24/7) Rupiah stabilized but tend to weaken
and moved in the range of Rp.13,375 – Rp.13,425 per USD.
Ironically Rupiah weakened when USD weakened against €uro
last Thursday (23/7) as Greek Parliament passed the Bill of Reformation. €uro
inched up by 0.65% against USD. All in all index of USD which measured USD
value against 6 leading currencies dropped by 0,50% to 97.109.
During transactions in New York, €uro rose to USD 1.002
from USD 1,0908 while Poundsterling rose to USD 1.5515 from USD 1.5602.
Australian Dollar dropped to A$ 0.7361 from A$ 0.7373; while USD was ¥123.81 against the previous ¥124.07. Against Swiss Franc, USD
dropped to 0.9575 against the previous 0.9611 but inched up to Canadian Dollar
1.3038 against the previous 1.3032.
Over the week, rupiah was predicted to be under pressure
and move in the range of Rp.13.375 – Rp.13,425 per USD. At home, BI’s policy to
axe economic growth from 5.4%-5.8% to 5% -5,4% posed as negative sentiment to
Rupiah.
Other causes that made Rupiah weaken was low transaction
of foreign currency after Lebaran which made liquidation tight. At home,
investors were waiting for better macro economic to Rupiah.
Indonesia was still under the influence of factor Greek
factor and increase of Fed Fund Rate by the Fed in the USA. There were high
expectations Rupiah might strengthen to Rp.12,750 – Rp.13,000 this year end.
At home, Government’s commitment to enhance budget
realization posed as positive catalyst to Rupiah. By Q 2 this year, budget
realization would still be below 50%, which means economic growth would be at
4.7% - 4.9%, buoyed by people’s consumption and improved export.
Budget absorption would be higher by Q 3 probably above
50%. By the time budget absorption was maximized, market players would have
growing confidence in the Government which would uplift economic growth to 4.9%
- 5.2% in Q 3 this year. Economic growth would
reach 4.8% - 5.1% in Q 3 this year which would strengthen Rupiah
provided that Government budget absorption was around 95% - 98%.
BI admitted that Rupiah was being undervalued; the
position was expected to free Indonesia’s export from pressures. Unfortunately
the momentum could not be grabbed by exporters for 3 reasons:
Firstly, dependency on primary commodities like mining
and plantation for export. Secondly, price of primary commodities that fell in
the global market. Thirdly economic slowdown among Indonesia’s trading partners
causing export to stagnate.
In fact Rupiah being undervalued had been going on for
long. Indonesia was being under the pressures to Tappering off in the USA in
2013; so BI would always be in the market to protect Rupiah with Rupiah being
undervalued, Indonesia had to struggle hard to strengthen competitiveness.
The Capital Market
IHSG index inched down by 3,844 points (0.38%) to the
level of 4,902.84 during closing session of BEI last Thursday (23/7) Index of LQ45
was also axed by 2,803 points (0.33%) to the level of 839.788. IHSG inched down
amidst low transaction. Foreign investors were seen to make foreign net sell
worth Rp.142.979 billion in all markets.
When transaction were quite, there were transactions of
173,429 times including 4.12 billion lots worth Rp.4.016 trillion. 136 shares
went up, 112 shares went down and 105 shares stagnated. Unlike BEI stockmarket
in Asia last Thursday (213/7) ended in green zone in spite of negative
sentiment from the global market.
Index of Nikkei 225 strengthened by 90.25 points (0.44%)
to the level of 20,683.95; index of Hang Seng rose by 116.23 points (0.46%) to
the level of 25,398.85 while index of Composite Shanghai soared up by 97.88
points (2.43%) to the level of 4,123.92 and index of Straits times inched up by
4.07 points (0,21%) to the level of 3,363.24.
Europe stockmarket weakened on the third day of
transaction, this time was the turn for energy share. In three days of
transaction on 21 – 23 July last index of Stoxx was already erorded by 8.7
points. Shares of Suisse rose by 6.4%, Unilever rose by 1.8% while index of Stox
600 weakened by 2.18 points or 0.54% to 3981.1. Marketpalyers were expecting
better growth in Europe.
In Wall Street, index was in low mood during transaction
last Thursday (23/7) after being driven by disappointing company’s performance
report. It drove Dow Jones shares to the red zone when calculated per early
year. Report of emitent’s performance report diminished since strengthening of USD
had given negative signals.
Shares of Catepillar dropped by USD 76.88 per share and
touched the lowest level in four years. the fourth largest producer of minery
equipments in the world reported lessened income as global economy slow down.
Furthermore shares of American Express also dropped by 2.5% to USD 77.01 per
lot since their income was below market expectation.
Finally index of Dow Jones shares inched down by 119.09
points (0.67%) to the level of 17,731.95. Index of S&P 500 dropped by 12
points (0.57%) to 2,102.15. Nasdaq index inched down by 25.36 points (0.49%) to
5,146.41 it was noteworthy that fall of Dow Jones index happened when US
corporate were showing force amidst world’s economic uncertainty.
An example was Google Inc. over Q2 this year Google’s
income increased by 11% to become USD 17,73 billion. Their net profit grew by
12% t become USD 3.93 billion. This Google achievement exceeded market
estimation for the first time since last quarter. Google was not alone. An
American e-commerce Titan, e-Bay reported income increase of 7%.
The banking sector which were most troubled since the
crisis of 2008 were now making their marks. The bank with third biggest asset
in America, Citigroup Inc made profit of USD 4.85 billion, the biggest profit
they made since 2008.
The illustrate, in Q 2 last year Citigroup only made
profit net profit of USD 181 million which was because Citigroup had to pay
court fine of USD 3.8 billion. Meanwhile bt profit made by Morgan Stanley for 3
months which ended in June 2015 was posted at USD 1.8 billion or 0.85 dollar
per share which was 4.8% less than Q 2 last year amounting to USD 1.9 billion.
Still shareholders could smile because Morgan Stanley’s
profit was the highest compared to other titanic banks. Price of Morgan Stanley
at the New York stockmarket was posted at USD 40.18 per share. Since early year
price of Morgan Stanley shares increased by 3.6% shares of Goldman Sachs
stagnated because their profit was cut by fine of USD 1.45 billion.
How about the prospect of the banking sector at Indonesia
Security Exchange (BEI) : It’s still attractive. The Deposit Insurance Agency
(LPS) rated performance of national banks today as positive and could be
contributive to national economic growth.
Bank’s resistance was relatively strong and fundamental
economy was notably good as evident in CAR of 20.5%. NPL ratio was also low at
2.45% (gross) while net NPL was only 1.42%. meanwhile LDR was safe at 87.9%.
Business News - July 28, 2015
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