Weekly Market Review (22 October 2018) - What happened & What's next?
- On domestic side, Sept’18 trade balance was better than expected at surplus of USD230m (vs market expectation of deficit USD300m). Moreover, market is expecting a better than expected 3Q18 earnings. Subsequently, Foreigners turned to be net buyers with USD83m net inflow and JCI strengthened +1.4%WoW to IDR5,837.291 last week. Miscellaneous industry became the most outperformed sector by gaining +5.5%WoW as market were expecting good results on auto sector. Meanwhile, Mining sector slipped by -0.8%WoW, the worst performer last week. On global side, Fed remained hawkish, indicating optimistic on U.S. economy. On the other hand China’s economy growth grew the slowest in 3Q18 since 2009. Newsflows to be watched within this week include Indonesia’s BI Reference Rate; US 3Q GDP, Initial Jobless Claim, New Home Sales, Manufacturing PMI; China’s Industrial Profit.
- IDR slightly strengthened by +0.1% WoW to IDR15,187, slightly worse than regional currencies. On the other hand, DXY increased to 95.7 (+0.5%WoW).
- Indonesia bond market yield decreased by 3-6 bps across the curved. 20 years series decreased the most by 6 bps.
- Foreign investor start to reduce position on Indo GB by IDR1.28trn, especially on short tenor series
- 10 year US Treasury yield increased from 3.15% to 3.20% over the week, following positive outlook from Fed minutes meeting and persistent strength in jobs data.
- FOMC meeting minutes leaned towards further rate hikes. The process of Fed balance sheet normalisation will continue for a while.
- US Initial Jobless Claims fell 5,000 to a seasonally adjusted 210,000 for the week ended Oct. 13, lower than market expectation of 212,000.
- U.S. Retail Sales Rose a seasonally adjusted 0.1% in September, below economists’ expectations for a 0.7% MoM increase, and matched the rate of spending in August.
- U.S. industrial production rose +0.3% last month (vs +0.4% in Aug’18), better than consensus number at 0.2%. Industrial output grew at a 3.3% annualized rate in 3Q18 after accelerating at a 5.3% in 2Q18.
- China GDP slows to 6.5% YoY in 3Q18, below market expectation of 6.6% YoY. It was weaker than 6.7% growth in 2Q18 and the weakest since GFC.
- China retail sales increased 9.2% in Sep’18, better than the forecast 9%.
- China CPI in September rose 2.5%YoY, 0.7% higher than August and in-line with market expectation.
- China industrial output increased 5.8%YoY in September, down 0.3% from August and below consensus target of 6%YoY.
- Indonesia’s trade balance was surplus of USD227m in Sep’18, much better than market expectation of deficit USD500m.
Foreign net purchases of Indonesia equities