Wednesday, 25 November 2015


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%.

From the external-internal combination, IHSG last week end (24/7) was in the range of 4,900 – 4,920. Meanwhile through the week IHSG was projected to be in the range of 4,910 – 4,930 with tendency to strengthen. (SS)

Business News - July 28, 2015

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