The JCI July 29, 2020
Jᴜʟʏ 29, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 5,060ᴘᴛ- 5,150ᴘᴛ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 5,113ᴘᴛ)
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴇɴᴅᴇᴅ ʟᴏᴡᴇʀ ʙʏ sᴏᴍᴇ 1% ᴏɴ ᴡᴏʀʀʏ ᴏꜰ ᴀɴᴛɪᴛʀᴜsᴛ ɪssᴜᴇs ᴏɴ Bɪɢ Tᴇᴄʜ
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ꜰʟᴜᴄᴛᴜᴀᴛᴇ ʙᴜᴛ sᴛᴀʙʟᴇ USDIDR sᴜᴘᴘᴏʀᴛ
Morning,
The Jakarta Composite Index (JCI) today (29/7) is expected to be in the range of 5,060pt – 5,150pt to fluctuate but stable USDIDR and liquidity support. Meanwhile, yesterday (28/7) in Wall Street the DJIA ended lower by 208 points or 0.8% at 26,379pt , while the S&P500 and the Nasdaq both closed with a dip of 0.7% and 1.3%, respectively. Investors were cautious over both what ultra – accommodative monetary policies the Fed might offer after the FOMC meeting.
𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐒𝐞𝐜𝐭𝐨𝐫
𝐖𝐞 𝐯𝐢𝐞𝐰 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐝𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭𝐬 𝐚𝐫𝐞 𝐰𝐢𝐭𝐡𝐢𝐧 𝐬𝐭𝐚𝐤𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬’ 𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐞, 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐭𝐡𝐞𝐬𝐞 𝐛𝐞 𝐦𝐚𝐢𝐧𝐭𝐚𝐢𝐧𝐞𝐝, 𝐛𝐨𝐭𝐡 𝐭𝐡𝐞 𝐜𝐨𝐮𝐧𝐭𝐫𝐲’𝐬 𝐬𝐭𝐨𝐜𝐤 𝐦𝐚𝐫𝐤𝐞𝐭 𝐚𝐧𝐝 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬 𝐛𝐞𝐧𝐞𝐟𝐢𝐭.
- Covid -19 latest situation
Since the relaxation of limited lock-down of Jakarta on June 15, new cases of Covid-19 has been in the increasing trend. Yesterday, newly-infected patients added by 412 cases and accounted to 28% of total new cases . The reason of the surge of additional new patients especially due to, according to the Governor Anies Baswedan, the fact that more tests have been performed to include those without symptoms. As quoted from the media, the percentage ratio of the people who take the test to positive cases (positivity ratio) is 5.2% (5.0% is an indicator of safe level, while 10.0% is dangerous). It is also cited that the Jakarta city aimed to find more infected patients earlier rather than sooner to facilitate further appropriate handling. Investors can use Jakarta as the gauge to measure Covid-19 development, also due to the fact that the city is currently the second largest contributor to national cases.
- Investments realization in the 2Q20
Data from the Indonesia Investment Coordinating Board (BKPM) showed that investments realization value during the period of January – June this year, at IDR402.6tr came in at close to 50% of the revised-target of the Board set in April to factor in pandemic climate of IDR817.2tr. It is worth-noting that Foreign Direct Investments (FDI) during the 2Q20 amounted to IDR97.6tr, almost similar to the 1Q120 level of IDR98tr, while on a YoY basis the 2Q20 FDI recorded a 7% decline. For the Domestic Direct Investments (DDI), 2Q20 saw an amount of IDR94.3tr which represented a 16.4% decline from the 1Q20, and a YoY of 1.4%.
2Q20 saw a seasonal decline for DDI, in our note which is expected tol stabilize for the rest of the year to fulfill the estimated level of IDR469.1tr this year out of total revised-target of IDR817.2tr. Favored sectors during January-June 2020 by both domestic and foreign ones to include Electricity, Gas, and Water Supply comprised of 16% of total investments realizations, while Transportation, Warehouse and Telecommunication , and Metal except Machinery and Equipment industry, at 14% and 11%, respectively.
- Domestic Car Sales
June’s level of domestic car sales of 12,623 units saw an upward meaningful movement of 256% increase as compared to the previous month. However, this year’s June sales represented a decline of 79% from 59,539 units. According to the national vehicles producers association (Gaikindo) June point of sale was in the last week of the month to have realized pent-up demand as the country started to relax its lock-down measure.
- Accommodative monetary policy response
The central bank Bank Indonesia intensified its monetary operations (to include operations of triple interventions, expansion tenor of the term-repo, and lowering reserve requirements for banks) in response to the Covid-19 pandemic since its initial out-break, mainly to maintain liquidity in the monetary system as well as to stabilize the USDIDR rates, on top of the objective to spur economic activities. Since March this year BI cut the reference rates twice, and this month by another 25bp to 4.00%, Lending Facility also by 25bp to 4.75%, and Deposit Facility by 25bp to 3.25%.
The aforementioned policies have been reflected in one of crucial financial indicator , the USDIDR exchange rates which has been appreciated and stabilized since the period of March 15, when it once weakening to the level of IDR16,741 on April 2.
- Major 2Q20 earnings release
Bank BCA (BBCA), one of important references of the country’s corporate performance, reported a stable first semester performance, with a slight decline of operation occurred during the 2Q20. Net interest income for 1H20 came it at IDR27.1tr as compared to IDR24.5tr in 1H19, while net commissions and provisions income reached IDR6.6tr in 1H20 as compared to IDR6.5tr in 1H19. Total credit grew by 5.3% YoY during 1H20 with most lines posted flat and or stable growth except vehicles financings that saw a double digits decline. BBCA overall performance was also supported by lower cost of funds and have factored in higher possibility of bad debts in the 2H20. The company was expensing allowance of IDR6.5tr in 1H20 as compared to IDR2.5tr in 1H19. BBCA reported bottom line of IDR12.2tr during the 1H20 as compared to IDR12.9tr in 1H19.
Meanwhile, Kino Indonesia (KINO) operational performance, except for its Pharmaceutical division saw a stable condition. KINO reported total revenue in 1H20 amounted to IDR2.2tr almost unchanged as compared to the same period last year. We observe any other listed counters that have published financials for the 2Q20, experiences moderate slowing operational performances.
At the other end, yesterday the WTI price closed lower to USD41.0/barrel or by 1.4% by support of weaker USD index for political risk among the United States and China. Meanwhile the USDIDR closed at IDR14.543 vs. IDR14.605 the previous one.
We advise the following recommendation , for both trading and longer-time investment purpose. 𝐀𝐀𝐋𝐈, 𝐋𝐒𝐈𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘈𝘨𝘳𝘪, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘜𝘯𝘥𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐔𝐍𝐓𝐑, 𝐈𝐓𝐌𝐆, 𝐀𝐃𝐑𝐎, 𝐏𝐓𝐁𝐀 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘢𝘭 𝘔𝘪𝘯𝘪𝘯𝘨, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵), 𝐆𝐆𝐑𝐌, 𝐔𝐍𝐕𝐑, 𝐈𝐂𝐁𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘯𝘴𝘶𝘮𝘦𝘳, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐀𝐒𝐈𝐈 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘈𝘶𝘵𝘰𝘮𝘢𝘵𝘪𝘷𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵), 𝐚𝐧𝐝 𝐀𝐂𝐄𝐒, 𝐒𝐂𝐌𝐀, 𝐌𝐀𝐏𝐈 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘛𝘳𝘢𝘥𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵),𝐚𝐧𝐝 𝐓𝐊𝐈𝐌 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘉𝘢𝘴𝘪𝘤 𝘐𝘯𝘥𝘶𝘴𝘵𝘳𝘺, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵).
Cheers,