The JCI August 6, 2020
Aᴜɢᴜsᴛ 6, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 5,085ᴘᴛ – 5,200ᴘᴛ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 5,127ᴘᴛ)
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴇɴᴅᴇᴅ ʜɪɢʜᴇʀ ᴍᴀɪɴʟʏ ᴏɴ Dɪsɴᴇʏ’s ʜɪɢʜᴇʀ-ᴛʜᴀɴ-ᴇxᴘᴇᴄᴛᴇᴅ ᴇᴀʀɴɪɴɢs
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ᴇxᴛᴇɴᴅ ɢᴀɪɴ ʙᴜᴛ ʀᴇsᴛʀᴀɪɴᴇᴅ ʙʏ ᴘʀᴏꜰɪᴛ-ᴛᴀᴋɪɴɢs
Morning,
The Jakarta Composite Index (JCI) today (6/8) is expected to be in the range of 5,085pt – 5,200pt to extend gain but restrained by profit – takings. Meanwhile, yesterday (5/8) in Wall Street the DJIA ended higher by 373 points or 1.4% at 27,202pt , while the S&P500 and the Nasdaq gained by 0.6% and 0.5%, respectively. Wall Street’s higher close mainly on Disney’s earnings release that showed for 8 cents per share, while analysts expected a loss of 64 cents per share. Disney said it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+. Disney’s direct-to-consumer and international segment was the main contributor. Disney+ reached 60.5 million paid subscribers, hitting its goal of 60 million to 90 million subscriptions by 2024, four years early.
𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐒𝐞𝐜𝐭𝐨𝐫
𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐟𝐫𝐨𝐦 𝐫𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐜𝐞 𝐬𝐞𝐜𝐭𝐨𝐫𝐬 𝐝𝐮𝐫𝐢𝐧𝐠 𝐭𝐡𝐞 𝟐𝐐𝟐𝟎
* 𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝟐𝐐𝟐𝟎 𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐢𝐨𝐧𝐬 𝐰𝐚𝐬 𝐚𝐭 𝟓.𝟑𝟐% 𝐘𝐨𝐘, 𝐚𝐧𝐝 𝐚𝐭 𝟒.𝟏𝟗% 𝐐𝐨𝐐, 𝐰𝐢𝐭𝐡𝐢𝐧 𝐭𝐡𝐞 𝐫𝐚𝐧𝐠𝐞 𝐨𝐟 𝐜𝐨𝐧𝐬𝐞𝐧𝐬𝐮𝐬 𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐞𝐬
* 𝐏𝐨𝐬𝐢𝐭𝐢𝐯𝐞 𝐠𝐫𝐨𝐰𝐭𝐡 𝐬𝐞𝐜𝐭𝐨𝐫𝐬 𝐞𝐱𝐢𝐬𝐭𝐞𝐝 𝐚𝐦𝐢𝐝 𝐜𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐢𝐧𝐠 𝐭𝐢𝐦𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐲𝐞𝐚𝐫
* 𝐖𝐞𝐥𝐥-𝐠𝐮𝐚𝐫𝐝𝐞𝐝 𝐂𝐎𝐕𝐈𝐃-𝟏𝟗 𝐬𝐩𝐫𝐞𝐚𝐝 𝐢𝐬 𝐭𝐡𝐞 𝐚𝐥𝐥-𝐚𝐧𝐝-𝐧𝐞𝐜𝐞𝐬𝐬𝐚𝐫𝐲 𝐜𝐨𝐧𝐝𝐢𝐭𝐢𝐨𝐧 𝐟𝐨𝐫 𝐫𝐞𝐜𝐨𝐯𝐞𝐫𝐲 𝐨𝐟 𝐝𝐨𝐦𝐞𝐬𝐭𝐢𝐜 𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐭𝐨 𝐚𝐜𝐡𝐢𝐞𝐯𝐞 𝐟𝐨𝐫 𝐧𝐨𝐫𝐦𝐚𝐥 𝐠𝐫𝐨𝐰𝐭𝐡 𝐫𝐚𝐭𝐞𝐬 𝐚𝐧𝐝 𝐡𝐢𝐠𝐡𝐞𝐫
Indonesia central statistics office (BPS or “Badan Pusat Statistik”) release the reading of the country’s 2Q20 GDP growth, at a contraction of 5.32% YoY (1Q20: +2.97% YoY) and at minus 4.19% QoQ (1Q20:-2.41% QoQ). The figures are within the median figure of the consensus estimates’ range of 2% YoY to 8% YoY. Indonesia 2Q20 growth figures should be an initial spirit-uplift for stakeholders and equity investors in particular given many other countries posted high double digits 2Q20 GDP contractions such as Singapore at 12.6% YoY, and the United States at 32.9% YoY.
Period of 2Q20 covered about 3-month full of limited lock-down in major cities in Indonesia with a gradual release that started in June 15. As expected, limited people’s activities led to lower spending during the 2Q20 as compared to the preceding 1Q20 QoQ. Private consumption in 2Q20 contracted by 6.51% QoQ (1Q20: -1.99% QoQ ) driven mainly by lowered Restaurant spending growth of -3.94% QoQ (1Q20: + 0.84% QoQ) and lowered Transportation and Communication item of -12.1% QoQ in 2Q20 (1Q20:-6.7% QoQ). These two items made up majority of Private Consumptions spending during the 2Q20 of 57.9% of total GDP by spending in 2Q20 (1Q20:58.1%, 2019: 56.6%). Meanwhile, on an annual basis Private Consumption contracted by 5.5% in 2Q20 (1Q20: +2.83% YoY, 2Q19: 5.18% YoY). Deeper drags on Private Consumptions spending during 2Q20 were made possible also due to the fact the Eid celebrations took place during the periode along with government stimulus. Also, the government initiated to delay secondary projects and shift budget for Coronavirus-related handling and welfare supports.
At the other end, Investments spending during the 2Q20 contracted by 8.6% YoY (1Q20: +1.7% YoY), mainly driven by contraction of Machineries & equipment spending by 12.9% YoY in 2Q20 (1Q20: -3.9% YoY). The growth figures are within the estimates of the Investment Coordinating Board (BKPM) body.
The 3 (three) biggest contributing sectors to the economy namely (1)Agriculture, Forestry, and Fishery supplied 15.5% value during the 2Q20 (1Q20: 12.8%, 2019: 12.7%). (2) Processing Industry of 19.9% in 2Q20 (1Q20: 19.9%, 2019:17.6%). Food and Beverages, and pharmaceutical made up most of the Processing industy. (3) Wholesales and Retails majority of Cars, Motorcycles and Services gave 12.8% value contribution in 2Q20 (1Q20: 13.2%, 2019: 13.1%). These 3 highest sectors by value , in 2Q20, grew by +2.1% YoY, -6.2% YoY, and -7.6% YoY, respectively. We consider the contractions for Processing and Wholesales industries as moderate given the higher contraction of Transportation and Warehouse sector in 2Q20 at 30.8% YoY, for example.
At the other end, obvious growth sector during the 2Q20 to include that of Information and Communicaton at 10.8% YoY (1Q20: 4.25% YoY), and Water Procurement, Waste Management, and Recycling grew by 4.6% YoY in 2Q20 (1Q20:-0.9% YoY).
Shift of resources including that of capital, labor, and technology is estimated to have taken place according the latest dynamic of the economy, we view, for optimal output.
Since the relax of the limited lock-down that started on June 15, COVID-19 cases have been on the rise, with Positivity Rates of 12.7% for Indonesia (Jakarta: 5.5%), and Mortality Rates of 4.7% (Jakarta: 3.8%). In response to the matter, particular in capital city Jakarta, the regional government has been gearing-up compliance vigilance and sanctions steps. According to the media, several major corporations have been temporarily suspended in operation for being failed to adhere on Covid-19 protocol procedures. It is for other cities; best interest to apply the same approach, in our view.
At the other end, yesterday the WTI price closed lower by 0.4% to USD41.5/barrel on raising cases of Coronavirus in the United States/ Meanwhile the USDIDR closed at IDR14.623 vs. IDR14.697 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,