MARKET STILL AWAITING FOR BETTER MACRO ECONOMIC PERFORMANCE

When global economic development was still showing uncertainty for many reasons, the only place to pin hope on to keep Rupiah and IHSG up was to restore fundamental economy.

Markertplayers were disappointed by macro attainments as shown by some main data through Semester 1 of this year which was below expectation. Indonesia’s economy was measured on the basis of the size of GDP based on price effective on constant price of 2010 coming to Rp.2,239,3 trillion.

Indonesia’s economy in Q II 2015 grew by 4,67% against Q II 2014 (y o y) a downturn compared to Q II-2014 which grew by 5,035 and Q I-2015 when it grew by 4,72%. Production wise growth was propelled by nearly all business sectors where highest growth was attained by Education sector which grew by 12,16%.

In terms of expenditure growth was supported by nearly all components the highest being Household consumption which grew by 4.97%. Indonesia’s economy in Q II – 2015 grew by 3.78%. (q t q).

In terms of production, highest growth was in the sectors of Agriculture, Forestry, and Fishery 10.08%, while in terms of expenditure it was in Government consumption at 32.117%.

Indonesia’s economy grew by 4.705% in Semester I 2015 (c t c). production wise growth was propelled by all sectors except Mining and Excavation which posted downturn of 3,585 while in terms of expenditure propelled by Household consumption which grew by 4.995.

Inflation was also below economic consensus. In July 2015 there was inflation of 0.93% with IHK Index of 121.26. Normally inflation during Lebaran was above 1%. Of 82 IHK Cities, 80 cities posted inflation and 2 cities posted deflation. Highest inflation index was in Pangkalpinang 3.185 with IHK 121.65 and the lowest was in Pematang Siantar 0.06% with IHK 123.59. meanwhile deflation was in Tanung Pandan 0.485 with IHK 125.30 and Marauke 0,65% with IHK 122.44.

Inflation rate of calendar year (January – July) 2015 was 1.905 and inflation level year to year (July 2015 against July 2014) amounting to 7.26%. Core components in July 2015 posted inflation of 0,34%; inflation level of core components of calendar year 2015 after year (July 2015 against July 2014) was 4.865.

Economic slowdown had caused Rupiah to be miserable against USD. In the end this would have negative impact on the stockmarket because emitents who depended on overseas loan in USD were tormented by Rupiah downfall. Weakening of commodity prices had enabled USD to continue strengthening and generate effect on other currencies.

On the other hand, although US manufacturing data to strengthen, manufacturing index of Europe and Asia tend to slow down so there was not enough ammunition for Asian currencies to strengthen. The result was that USD seemed to stand tall above other currencies. Marketplayers seemed pessimistic about released data of Indonesia’s economic growth till end of year which might not even inject positive sentiment on Rupiah.

Beside the internal factor there was external factor which overshadowed domestic financial performance. For example the US stockmarket which generated negative sentiment due to falling Dow Jones Index brought negative effect on Asia’s stockmarket including Indonesia.

The Moneymarket

Rupiah value against USD during transaction last Friday (7/8) was corrected as USD strengthened against a number of world currencies Rupiah position was at Rp.13,539 per USD being depreciated by 16 points against closing session on Thursday afternoon (6/8) at Rp.13,523. Meanwhile based on JISDOR Rupiah position was at Rp.13,529, being depreciated by 12 points against Thursday afternoon (6/8) at Rp.13,517 per USD.

Meanwhile USD was at highest position against ¥en for 2 months after getting stronger against some currencies, being supported by new data which supported increase of US benchmark rate. USD against Yen was at 124.835 after being above 125,000 for first time since June.

Poundsterling also rose from the lowest position over the past 2 months from 1.5526 to 1.5607 per USD as investors bet that BoE would increase benchmark rate for the first time nearly 2 decades.

Malaysia’s Ringgit posted deepest slump in the region during transaction last Thursday (6.8). Ringgit weakened by 0.3% to become 3.8905 per USD – even during previous transaction Ringgit touched 3.8948 or weakening by 0,5% to the lowest level since September 1998. At that time (1998) Ringgit was at the position of 3.9340.

Weakening of Ringgit happened since Malaysia’s forex reserves dropped below the psychological level of USD 100 billion. This indicated that Bank Negara Malaysia the Central Bank would find difficulty in controlling Ringgit volatility lately.

Data of Malaysia’s Central Bank released on July 23 last had it that the forex reserves amounting to USD 100.5 billion was enough for financing 7.9 month of import and 1.1 times short term external debt. Meanwhile global investors had released their Malaysian shares by net sell totaling Ringgit 11.7 billion or Ringgit 3 billion throughout the year. This was the biggest capital outflow since 2008.

Back to Rupiah, signal of constant weakening had been visible since transaction last Thursday (6/8). Rupiah since Friday weakened by 15 points to become Rp.13,518 against the previous position of Rp13,503 per USD. Although data of GDP of Q II-2015 was better than market estimate, it was not good enough to buoy up Rupiah.

Data of Indonesia’s GDP as released by BPS in Q II-2015 at 4.67% was slightly slowing down compared to same period last year which grew by 5.03%. However, Indonesia’s growth rate then was above market projection at 4.61% - 4.65%. Analysts stated that negative impact to the released Indonesia’s Consumer’s Confidence index which dropped to 109.9 and the still slow going economic growth which was way below 5% in Q II 2015, generated negative sentiment on Rupiah.

Still about the analyst’ opinion: market players’ fear of the Fed’s plan to increase FFR this very year was among the factors that held Rupiah down. Somehow there was still high expectations for Rupiah to rise if execution of Government’s capital expenditure’ was maximized by Semester II-2015.

Government’s expenditure was by sector showing improvements as indicated by increased infrastructure building.

Finance Minister Bambang Brodjonegoro stated that realization of Government’s expenditure up to Semester I-2015 came to Rp.436.1 trillion or 33.1% of ceiling in APBN-P amounting to Rp.1,319.5 trillion. The Realization consisted of Ministrial expenditure Rp.208.5 trillion or 26.2% on non-ministrial expenditure Rp.227.6 trillion or 43.4%.

The Finance Minister explained that budget absorption by Ministries involved 40 ministries had high absorption above 26.2%, 16 ministries had moderate absorption capacity between 20% and 26.1% and 29 ministries had absorption capacity below 20%. Ministries with low absorption capacity were the Ministry of Less Developed Villages and Transmigration, the Ministry of Internal Affairs, the Ministry of Transportation and Ministry of Tourism.

Meanwhile the highest absorption by non Ministries were for subsidy management which had reached Rp100,4 trillion or 47.4% of credit ceiling of Rp.212 trillion and management of special transaction which came to Rp50.7 trillion or 505 of credit ceiling of Rp.101.4 trillion; so realization of Government expenditure in Semester 1 came to Rp.436.1 trillion plus realization of transfer to the regions Rp.337.7 trillion so the entire state expenditure came to Rp.773.9 trillion or 39% of ceiling Rp.1,984.1 trillion.

The Minister of Finance also stated that real deficit in budget for Semester 1 came to Rp.76.4 trillion or 0.66% against GDP originating from state’s income Rp.697.4 trillion and state’s expenditure Rp.773,9 trillion. With budget deficit estimated at Rp.76.4 trillion or 0,66% of GDP so there would be carry over on June 30 Rp.117,6 trillion cash ready to be spent for ministries or transfer to the regions.

Assuming that the Government was more aggressive in encouraging ministries to spend budget, market’s trust would improve and it would help to strengthen Rupiah to Rp.13,250 – Rp.13,500 per USD during closing session last week (7/8).

So if the Government was coordinating better and public confidence would be stronger, it would jack up Rupiah value to Rp.13,00 – Rp13,300 per USD this week.

The Capital Market

Index of IHSG and BEI last Thursday (6/8) was continuing strengthening of 5.40 points or 0.11% to become 5.40 points as national economic growth was still within market expectation. Index was opened to strengthen by 5,40 points or 0.11% to become 4,855.94. Meanwhile LQ45 moved up by 1.38 points (0.17%) to become 828,93.

Data of Indonesia’s GDP which was better than market estimation induced market players to do act of buying, although Indonesia’s GDP in Q II 2015 slowed down to become 4.67% against attainment of Q II 2014 which grew by 5.03%. However, this growth rate was above market projection around 4.61% - 4.65%.

Besides, strengthened business trust enhanced positive sentiment at the domestic stockmarket which drove shares of the banking sector and other sectors to move up and support upgoing IHSG.

Last weekend, (7/8) in tandem with Asia’s stockmarket movement, IHSG was opened in the negative zone. Data showed that in the morning session index was posted to inch down by 0.36% to 4,789.32. There were 102 shares which were under pressure. Meanwhile the number of shares which moved up was 70 shares while other 73 shares were stationary. Total volume of transactions include 712.894 million shares with total transaction amounting to Rp.593.810 billion.

There were 6 sectors which turned red. There sectors with biggest downturn were the financial sector which slumped by 1.16%, other industry sectors which dropped by 0.55%. shares of index LQ45 with deepest downturn was PT Bank Negara Indonesia Tbk (BBNI) down by 2,9% to Rp.5,025, PT Perusahaan Gas Negara Tbk (PGAS) down by 2.73% to become Rp.3,745 and PT XL Axiata Tbk (EXCL) down by 2.45% to become Rp.2,790.

Shares of index LQ 45 with ig increase of price were among others PT United Tractors Tbk (UNTR) increased by 1.55% to become Rp.19.600, PT Unilever Indonesia Tbk (UNVR) increased by 1.04% to become Rp.38,859.- PT Telkom Increased by 0.85% to become RP.2,955.

The condition of regional stockmarket which was still weak accounted for IHSG downturn. Index of MSCI Asia Pacific was down by 0.3%. Nearly all the reference indices in the region signaled red light. For example index of S&P/ASX 200 Australia which dropped by 1,4%.

Hence index Australia posted biggest downturn in the past 2 months. One of the shares that governed Australian stockmarket was among others ANZ which was axed by 7.3% to become A$ 30,21, Index of Topix Japan inched down by 0.2%. Hang Seng also weakened by 175.96 points (0,23%) to the level of 24,338.20 but index of Nikkei rose by 124.69 points (0.605) to the level of 20,738.75, On the contrary Straits Times weakened by 7,46 points (0,23%) to 3,184.37.

Meanwhile investors tend to wait for data of forex reserves released last week. Foreign investors were doing net sell of Rp.252.26 billion during transaction on Thursday (6/8) last. On the one hand, BI had not intervened Rupiah which was depreciated.

Hence IHSG and BEI last Friday (7/8) was predicted to cover up gap and tend to move mixed in the range of 4,750 – 4,840. At home, negative sentiment was from Rupiah value which again slumped.

Nevertheless IHSG was still to be sustained by economic data to be released monthly, quarterly or by semester. IHSG still needed strong sentiment to resist or to rebound. If sentiment was not there, IHSG would continue weakening.

Evidently during initial session last Friday (7/8) IHSG was closed to weaken by 29,762 points (7/8) IHSG was closed to weaken by 29,762 points (0.62%) to the position of 4,776,902.  Through the initial session, index reached its highest level of 4,804.329 or weakening by 2,235 points to reach its lowest level at 4,771,670 or weakening by 34.894 points.

72 shares strengthened, 159 shares down, 89 shares stagnated and 237 shares not being transacted at all. Al indices were compact to bring IHSG down. Among others premium LQ45 shares which dropped by 5.939 points (0.725%) to 812.947; IDX 30 was down by 3.05 points (0.718%) to the position of 421.777; BMX was down by 9.422 points (0.63%) to 1,370.462; DBX was down by 0.942 points (0.392%) to 632,15.

Transactions at the regular market was posted at Rp.1,3 trillion and Rp.499.07 billion at the negotiation market. Meanwhile foreign investors shares buying worth Rp.581.01 billion and sales of shares worth Rp.701.2 billion. All in all foreign investors posted net foreign sell worth Rp.120.1 billion

IHSG stood a chance to once again rely on Government’s expenditure in Semester 2 which was promised to be more aggressive. As known absorption of Government infra structure would influence emitent’s performance and bluepeint at the stock hall.

Since early this year, budget for infra structure had always been the center of attention. Increase of budget for infra structure by 63% from Rp.179.9 trillion in APBN-P 2014 to Rp.290,3 trillion in APBN-P 2015 would increase infra-structure spending.

To look at the budget for infra structure, the biggest portion was for the Ministry of Public Works and People’s Housing, i.e. 36% for infra structure of 2015 budget. Some analysts used realization of budget of the Ministry as catalyst to what extend absorption of budget for infra structure had been absorbed.

Unfortunately realization of the Ministrial budget was not as good as predicted. Absorption was only Rp.118.5 trillion for the entire budget. As a whole realization of APBN-P budget for 2015 for Semester 2 2015 was realization of Government income 39.65 or Rp.697.4 trillion of the targeted Rp.1,7612.6 trillion. This realization was slower than last year at 42.8% if target or Rp.712,7 trillion.

In terms of absorption, this realization was slower than last year at Rp.41.2%. but in terms of amount was more than last year at Rp.759,9 trillion. Slow absorption of budget was reflected in the performance of some construction emitents at BEI. Net profit of 8 construction emitents and pre pressed concrete in the first half of this year weakened by 17.4% (y o y) to become Rp.621.91 billion against the previous year at Rp.752,88 billion – and yet last year net profit made by the 8 emitents was still growing by 4.39% (y o y) against Rp.721,22 billion in 2013.

Lessened profit of the construction and precast concrete emitents was in line with corrected total income data of each company. The eight emitents were only able to pocket income of Rp.15.38 trillion in Semester I-2015 or down by 8.07% (y o y) against the previous year at Rp.16.73 trillion. And yet in 2014 income of the 8 construction emitents managed to grow by 8.68% from Rp.15.39 trillion.

From the above picture, IHSG last week (7/8) was still consolidating at around 4,785 – 4,825. If optimism market players bettered, IHSG might continue this year in the range of 4,825 – 4850 being supported by the still zealous construction sector. The banking sector joined the upturn as credit facilities increased to the infra structure sector including construction. (SS)

Business New - August 12, 2015