The Moneymarket
The issue of fiscal cliff in the USA was predicted still to be the focus
of attention of the global moneymarket. Today Barrack Obama administration was
challenged to revitalize the state budget whereby to safeguard continuity of US
economic development.
The Fiscal Cliff solution would rely on two instruments. Firstly, the US
Government would axe routine expenses especially for defense purposes.
Secondly, in parallel with that the Obama Government would increase taxes on
the rich group in the USA. Those were citizens with income above USD 250,000
per annum. Data had it that 2% of America’s population belonged to this wealthy
group.
Assuming talks over the fiscal cliff ran smoothly which was due in early
2013, the prospect of economic recovery in the USA would be clear. The positive
impact would spread out to all trading sectors in the USA. The financial sector
would also be energized as market trust increased.
Demand for property and automotive in the USA would soar up.
Unemployment figure would drop to the expected level, i.e. 7%. Manufacturing
index would exceed the safe level of 50. In the end economic activity would be
more dynamic.
America’s trading partner, especially Indonesia would share the cream of
success where Rupiah value would arrive at a new equilibrium. Export demand
from America would increase. Inflow of foreign capital would be heavier. There
was ray of hope that world’s economic recovery would come sooner.
Rupiah exchange rate value against rate value against USD at the
inter-bank spot market Jakarta last Wednesday (28/11) was closed to thin out by
5 points (0.051%) to the position of Rp 9,615/Rp 9,610.615. Weakening of Rupiah
today was still determined by market’s fear over the condition in Europe. Soon
as the euphoria about bailout for Greece was over, Greece had been confirmed
about their getting bailout which was scheduled to liquidate on December 13,
2012. However the latest development in Germany signaled some obstacles as the
German Parliament discussed the latest bailout scheme for Greece.
Therefore, over the sessions Rupiah reached its lower level of Rp 9,620
after momentary strengthening to Rp 9,595 against the opening level of Rp 9,600
per USD. There was report that the German Parliament would conduct voting for
bailout for Greece on Friday last week but the last comment by one of Germany’s
house members of the Steinbroejk opposition party was that the voting would be
postponed. Germany still needed time to dissect the bailout schemed up by
finance minister of the Euro zone.
The market feared that Germany might not execute what was being agreed
upon at the Euro Group meeting yesterday with numerous points. Supposedly the
voting would be postponed until all information on rescuing Greece ware
completed. Besides, most probably transfer of profit from Greece bonds obtained
by the European Central Bank (ECB) for the Athens administration was questioned
by the German’s Central Bank.
The Deutsche Bundes bank claimed that they were more rightful over the
profit obtained from the Greece bonds. Therefore, transfer of bond-based profit
to Greece would pose an object of dispute in the future.
At the same time Rupiah was also getting negative sentiment from the report-on-inflation
of the Bank of England (BoE) which was quite strong because the BOE was still expressing
their worries over economic contraction in England although data of the latest
GDP showed it was still growing by 1% for quarter III-2012.
This was not to mention remark made by one of the Fed’s executive who
protested extension of Operation Twist which ended in December 2012. Besides
opposition to increased purchase of mortgage-based bonds known as the third quantitative
easing (QE-3) all in all it was negative sentiment for Rupiah.
Moreover economic data released by the US Government was reasonably
positive, such as the Index of house price, consumers confidence index and
manufacturing index. This confirmed performance of USD against other currencies
which posed as pressures on Rupiah. All in all Rupiah inched down amidst value
of USD which remained stationary against other main currencies but
strengthening against Euro.
For this week, with better sentiment there was opportunity for Rupiah to
strengthen to around Rp 9,580-Rp 9,620 per USD amidst Indonesia’s well-managed
economy.
The Capital Market
The
same hope was pinned on the performance of IHSG stocmarket, which was expected
to pass the crucial point. After momentary slump to below the psychologic level
of 45,300 finally IHSG settled at the level of 4,304.84. Meaning last Wednesday
(28/11) index only
weakened by 32.69 points (0.75%) against previous
closing session.
This was most surprising; the point was that this deep sinking happened
at the time when Uni Europe’s Finance Minister and the International Monetary
Fund (IMF) agreed on Greece’s bailout fund amounting to Euro 44 billion.
According to Olli Rheine, Monetary and Economic Commissioner of Uni Europe
Greece would receive the bail out fund on December 13, 2012. Thankfully this
good news would bring better future for Greece and Europe.
However it was not enough to console stockmarketplayers, while creditors
agreed to axe credit interest rate and delay debt’s due date to 10 - 15 years.
What was more heartening was that the Minister of Finance of Uni Europe had
promised to extend Euro 240 billion Euro. Of that amount so far Greece had
benefited bail out fund of Euro 150 billion.
Supposedly according to John Veter, the good news from Greece had its
positive impact on IHSG. And why was it so hard for IHSG to consolidate? One
thing was sure that downturn of indices was also happening in some other money
markets of the world. In Wall Street, index of Dow Jones (DJIA) and Nasdaq both
inched down by 0.69% and 0.30%.
Not just in America, downturn of index was also happening in shares of
some Asian stockmarkets. Index of Hang Seng for instance, inched down by 0.62%.
Weakening was also happening to Kospi (0.65%), Nikkei (1.22%) and Straits Times
(0.09%) The turbulence in many stockmarkets probably accounted for weakness of
IHSG.
It seemed that decline of some stocmarkets of the world was related to a
series of occurrence happening in America. Last week Ben Bernanke, Governor of
the Fed delivered his message about the fiscal cliff in the USA. Besides, in
the near future there would be release on consumer confidence. While waiting
for good news from America, investors from some stockmarkets were on a selling
spree.
Some people believed Bernanke planned to announce stimulus of quantitative
easing of fourth edition to inject more steam to America’s feeble economy as
result of tax increase and austerity plan of President Barrack Obama, however
some people regarded Bernanke as a person of high discipline and prudence.
The different opinions would certainly bring their own consequences. If
Bernanke’s statement and release of consumer’s confidence in America were
positive, IHSG was predicted to soar up. In the reserve case prices of shares
would slump because the fiscal cliff policy, which was Obama’s invention, would
drive America back to recession cliff.
If Bernanke was sure to execute the phase IV of quantitative easing it
was time for investors to shop around because index would move in the range of
4,300 - 4,400 this week. Admittedly US stockmarket moved down during
transaction on Wednesday (28/11) as investors were still worried about
difficult negotiations over the fiscal cliff.
Investors stormed by the hordes to secure a safe position. Investors
were responding to the statement of house members about the title progress in
the effort to avoid the fiscal cliff. America was under the threat of recession
with the increase of tax and budget saving as per January 1, 2013. The market
was also anxiously waiting for data of house sales for October.
Some economists were expecting increase like last September. The market
was also observing news about the Fed who would release Beige Book about the
condition of regional economy. The release was expected to induce growth in
spite of the Sandy hurricane.
Broadly speaking the threat of fiscal cliff would trouble the global
stockmarkets. Europe’s stockmarkets inched down by 0.4%. Asia’s stockmarket was
marked with downturn like index of Nikkei and Shanghai which continued to slip
down. Index of Nikkei hit the lowest level in the past 4 years.
Back to BEI, apparently IHSG had risen by around 14.5% by year-to-sate
up to November 26, 1012 last. Compared to other Asian stockmarkets, IHSG’s
performance was in the fourth best position. Somehow the position slumped
against that of early 2012.
In early 2012 last, Indonesia’s stockmarket was still in second
position. Today IHSG was still below Thailand as champion of regional
stockmarket with increase of 28.5%. Meanwhile India’s stockmarket flashed by
20% while index of Hong Kong, Hangseng rose by 18.6%.
With listed members numbering 460 this November, stock regulators were
expecting increase of domestic contribution. Hence in case of turbulence in the
capital market and global redemption, IHSG had the strength to keep from
sinking too deeply or collapse so national economy would not be shaken. Stock
market authorities were not too expectant that domestic investors would
dominate ownership of shares.
Business News - December 5, 2012
