The JCI August 19, 2020

𝐀𝐮𝐠𝐮𝐬𝐭 𝟏𝟗, 𝟐𝟎𝟐𝟎

* 𝐓𝐡𝐞 𝐉𝐂𝐈 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 𝐫𝐚𝐧𝐠𝐞:  𝟓,𝟐𝟓𝟎𝐩𝐭 – 𝟓,𝟒𝟎𝟎𝐩𝐭( 𝐘𝐞𝐬𝐭𝐞𝐫𝐝𝐚𝐲 𝐜𝐥𝐨𝐬𝐞: 𝟓,𝟐𝟗𝟓𝐩𝐭)

* 𝐖𝐚𝐥𝐥 𝐒𝐭𝐫𝐞𝐞𝐭 𝐞𝐧𝐝𝐞𝐝 𝐦𝐢𝐱𝐞𝐝 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐃𝐉𝐈𝐀 𝐝𝐨𝐰𝐧 𝐦𝐨𝐝𝐞𝐫𝐚𝐭𝐞𝐥𝐲

* 𝐓𝐡𝐞 𝐉𝐂𝐈 𝐢𝐬 𝐞𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐭𝐨 𝐞𝐱𝐭𝐞𝐧𝐝 𝐠𝐚𝐢𝐧 𝐛𝐮𝐭 𝐜𝐚𝐩𝐩𝐞𝐝 𝐛𝐲 𝐩𝐫𝐨𝐟𝐢𝐭 – 𝐭𝐚𝐤𝐢𝐧𝐠𝐬

Morning,

The Jakarta Composite Index (JCI) today (19/8) is expected to hover between  5,200pt – 5,400pt to be in profit-taking mode but supported by stable USDIDR and oil close. At the other end, the central bank Bank Indonesia end of monthly meeting release today is expected to provide support.  Market participants expects the reference rate of BI7DRRR to be held unchanged at 4%.

As new cases of COVID-19 consistently rising in the capital city, Jakarta governor Anies Baswedan was quoted in the news to consider to re-implement the limited lock-down as was the case in early March. Current transition of limited lock-down will end on August 27, until when the regional government will monitor the COVID-19  spreading condition.  Latest data on 3-weeks positivity rate in Jakarta was 8.9%, much higher than that of previously and of international threshold of 5%.

Decision for the capital city Jakarta to return to the previous limited lock-down mode (whereby businesses is prohibited to operate vs. currently permitted at 50% of capacity)  will cause a hiccup to the current trend of the Jakarta stock market, in our view.

𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐬𝐞𝐜𝐭𝐨𝐫

𝐦𝐚𝐲 𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐟𝐫𝐨𝐦  𝐩𝐚𝐧𝐝𝐞𝐦𝐢𝐜 – 𝐚𝐝𝐚𝐩𝐭𝐢𝐧𝐠 𝐉𝐮𝐥𝐲’𝐬 𝐭𝐫𝐚𝐝𝐞 𝐩𝐫𝐨𝐟𝐢𝐥𝐞

Indonesia July’s trade figure came out with a net surplus of USD3.3bn , the highest since February         and bringing total surplus to USD8.8bn in the period of seven months until July this year (7M20) vs. a deficit during January 2019-July 2019 (7M19) of USD2.2bn , and vs. a total deficits of USD3.6bn last year.

7M20 surplus of non-oil & gas trade increased by 271% to USD12.6bn as compared to USD3.4bn in 7M19.  Meanwhile, deficits of oil & gas trade declined by 31% to reach USD3.8bn in 7M20 as compared to a deficit of USD5.5bn in 7M19.

In July 2020, 5 (five) biggest contributors to the monthly  increase of non –oil & gas exports value include those of Gold, Jewelry and Pearl of USD452.7mn (July 2019:none), Fat and Vegetable Oils of USD247.9mn (July 2019: none), Vehicles and spare-parts of USD 144.3mn (July 2019: USD302.2mn), Iron & Steels of USD134.3mn (July 2019: none),  Machineries / equipment of USD96.0mn (July 2019: USD221.2mn).

With non-oil export contributed to around 95% of total export , the above of July export movement was in-line with the slowing economic growth of main exporting countries that is China, Japan, and the United States.

At the other end, in July 2020, 5 (five) biggest contributor to the monthly decrease of non-oil & gas imports value include those of Cereals of USD77mn (2019:USD36.8mn), Milk, Butter & Eggs of USD91.8mn (July 2019: USD9.7mn), Vegetables of USD102.1mn (July 2019: none), Sugar & Candies of USD120.7mn (July 2019: none), Vehicles and spare-parts of USD157.9mn (July 2019: USD15.8mn). Furthermore, import of consumptions goods declined by 24.1% YoY as compared to July 2019 , while import Raw Materials declined by 34.5% YoY  and Capital Goods by 29.3% YoY.

The above movement of import trade value was also consistent with the pandemic-related shift of activities pattern, in our note, whereby non-essential goods import decreased in a higher rates.

As higher surplus brings in more foreign exchange that eventually create appreciation to the local currency IDR, trade profile during the pandemic context may provide a better base for sustainably better trade profile, in the future, in our note.

Meanwhile yesterday (18/8) in Wall Street  the  DJIA  ended lower by  67 points or 0.2%  at 27,778pt , while the S&P500 and the Nasdaq both closed higher by 0.2% and 0.7%, respectively.

At the other end, yesterday  the WTI price closed unchanged at USD42.9/barrel as traders were awaiting the weekly data of the US inventory level. Meanwhile the  USDIDR  closed  at IDR14.907  vs. IDR14.917 the previous one.

We advise the following recommendations, 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,