The JCI July 15, 2020
Jᴜʟʏ 15, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 5,035ᴘᴛ – 5,150ᴘᴛ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 5,079ᴘᴛ)
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴇɴᴅᴇᴅ ʜɪɢʜᴇʀ ᴏɴ ʙᴀɴᴋs’ ᴇᴀʀɴɪɴɢs sᴜʀɢᴇ ꜰʀᴏᴍ ᴛʜᴇ ɴᴏɴ-ɪɴᴛᴇʀᴇsᴛ ɪɴᴄᴏᴍᴇ sɪᴅᴇ
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ɢᴀɪɴ ᴇᴅɢᴇ ᴀʟsᴏ ʙᴇɪɴɢ sᴜᴘᴘᴏʀᴛᴇᴅ ʙʏ sᴛᴀʙʟᴇ USDIDR ᴀɴᴅ ᴏɪʟ ᴄʟᴏsᴇ
Morning,
The Jakarta Composite Index (JCI) today (15/7) is expected to be in the range of 5,035pt – 5,150pt to gain edge with investors being cautious for the 2Q20 earnings release. Meanwhile, yesterday (14/7) in Wall Street the DJIA ended higher by 557 points or 2.1% at 26,643pt, while the S&P500 and the Nasdaq both ended higher by 1.3% and 0.9%, respectively. At the other end, stock futures climbed higher on another upbeat news on Covid-19 vaccines trials, from the bio-tech company Moderna.
On the news release last night (14/7), both the Indonesia government and House of Parliament, during the session on a preliminary discussion on the government’s draft budget for next year (RAPBN-2021), have ratified the following assumptions
- GDP growth of 4.5% – 5.5%
- Inflation rate at 2%-4%
- 10 year government bonds yield at 6,29% -8.29%
- USDIDR exchange rate at IDR13,700 – IDR14,900
- Indonesia oil price at USD42/barrel-USD45 / barrel
- Oil lifting rates at 690 thousand barrels / day -710 thousand barrels / day
- Budget deficits at 3.21% -4.17% of GDP
- Country debt level of 37.64-38.5% of GDP
- Budget primary balance at 1.24% – 2.07% of GDP
The above assumptions are conducive for domestic stock market, in our view, mostly because of the air of confidences being disseminated from the authorities at present. Indeed, Indonesia has valid reasons to be back to around normal level next year (please see our previous publications), with the Covid-19 pandemic spread be well under controlled.
𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐒𝐞𝐜𝐭𝐨𝐫
𝐒𝐭𝐚𝐛𝐥𝐞 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬’ 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐢𝐧𝐠 𝐩𝐨𝐰𝐞𝐫 𝐨𝐰𝐞𝐬 𝐭𝐡𝐚𝐭 𝐦𝐮𝐜𝐡 𝐭𝐨 𝐬𝐭𝐚𝐛𝐥𝐞 𝐦𝐨𝐧𝐞𝐭𝐚𝐫𝐲 𝐚𝐧𝐝 𝐛𝐚𝐧𝐤𝐬 𝐬𝐲𝐬𝐭𝐞𝐦
Indonesia per capita income was USD4,175 in 2019 which represented an increase of 6% YoY (2018: 1.6% YoY) should find its way, through multiplier effect, into stable if not increased purchasing power this year, in our note. This has been made possible under the situation of stable monetary and banks system whereby consumers’ trust are in-tact which are also indicated in the country’s monetary statistics.
As of April this year, Indonesia commercial banks Capital Adequacy Ratio (CAR) was at the position of 22.1% (2019: 23.4%, 2018: 22.9%, 2017: 23.2%). This is far above the standard of Basel III requirements of 8%. Meanwhile, the banks Loan to Deposit ratio (LDR) stood at 92.2% (2019: 94.4%, 2018: 94.8%, 2017: 90.4%), within the central bank Bank Indonesia safe range of 78% – 92%. Furthermore, the ratio of liquid assets to total assets . in April this year, improved to 16.2% (2019: 15.5%, 2018: 14.9%, 2017:18.6%). These performances are within single digits credit growth which was 8.2% YoY in April (2019: 7.9% YoY, 2018: 6.8% YoY, 2017: 9.2% YoY).
At the similar period, Indonesia inflation rates have been hovering at the range of 3% – 4% ( an exception on June 2017 at 4.37% YoY ), within the setting of reference rates that ranged of the lowest at 4.25% and the highest of 6%, all the while with USDIDR JISDOR rates ranged averagely from IDR13,200 – IDR15,000 ( with some brief occasions higher than IDR16,000).
The aforementioned facts, say much on Indonesia stability of monetary and banks system, in our view. The stability, earned through prudent monetary and fiscal approaches since the lesson of crisis during the year 1998, put Indonesia in a fortunate a global lock down situation at present, whereby most countries are facing economic contraction and negative interest rates.
Tomorrow (16/7) the central Bank Indonesia (BI) will again decide on reference interest rates, given the current position, BI has the luxury of time to adjust accordingly, in our observation.
At the other end, yesterday the WTI price increased by 0.5% to close at USD40.3/barrel ahead of its OPEC plus meeting today. Meanwhile the USDIDR closed at IDR14.512 vs. IDR14.486 the previous one.
We advise the following recommendation as for now, 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,