The JCI June 5, 2020
Jᴜɴᴇ 5, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 4,825ᴘᴛ – 4,950ᴘᴛ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 4,917ᴘᴛ)
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴇɴᴅᴇᴅ ꜰʟᴀᴛ ᴀꜰᴛᴇʀ ᴅᴀʏs ᴏꜰ ʀᴀʟʟʏ ᴏɴ ʙᴜsɪɴᴇssᴇs’ ʀᴇᴄᴏᴠᴇʀʏ ᴘʀᴏsᴘᴇᴄᴛ ᴀꜰᴛᴇʀ ʟᴏᴄᴋ-ᴅᴏᴡɴ
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ᴄᴏɴsᴏʟɪᴅᴀᴛᴇ ᴀɴᴅ ᴘᴀʀᴛʟʏ sᴜᴘᴘᴏʀᴛᴇᴅ ʙʏ sᴛʀᴏɴɢᴇʀ USDIDR
Morning,
The Jakarta Composite Index (JCI) today (5/6) is expected to be in the range of 4,825pt – 4,950pt to be in consolidation phase. Meanwhile in Wall Street yesterday (4/6) the DJIA closed higher at to end at higher at 26,282 or by 12 points or 0.1% while the S&P500 and the Nasdaq both ended lower by 0.3% and 0.7%, respectively.
.At the other end, yesterday the WTI price closed almost unchanged at USD37.4/barrel vs. USD37.1/barrel the previous one. OPEC plus meeting to decide extension of 9.7mn supply cut, as scheduled to be held yesterday, had been delayed. Meanwhile the USDIDR closed higher at IDR14.165 vs. IDR14.245 the previous one.
Iɴᴅᴏɴᴇsɪᴀ ᴄᴜʀʀᴇɴᴛ ᴇsᴛɪᴍᴀᴛᴇᴅ GDP ɢʀᴏᴡᴛʜ ᴛʜɪs ʏᴇᴀʀ ʙʏ ᴄᴇɴᴛʀᴀʟ ᴛʜᴇ ʙᴀɴᴋ Bᴀɴᴋ Iɴᴅᴏɴᴇsɪᴀ (BI) ᴀɴᴅ ʙʏ ᴄᴏɴsᴇɴsᴜs
2Q20 GDP growth data will be an important indicator for Indonesia economic growth this year. BI latest estimate called for an annual quarterly growths of 0.4%, 1.2%, and 3.1%, respectively for 2Q20 , 3Q20, and 4Q20. At the other end, major private institutions presently estimate that Indonesia will register contraction in the 2Q20, by the range of 1% YoY – 4% YoY. This implied that domestic economy is somehow prevented to record a contraction during this challenging year, against that of the neighboring countries such as Singapore (the government estimate of -4% YoY to 7% YoY ).
Current Indonesia GDP estimate for this year is an encouraging fact, however this achievement will mostly depend on the tamed-spreading of Covid-19. To this respect, capital city Jakarta has shown an encouraging development and being able to be set as reference ( see site Jakarta Corona for detail), against other regions in Indonesia. Limited lock-down in the Jakarta city has been extend to June 15, as a prudent move in our view, and traffic to get into Jakarta city has been strictly regulated to prevent the spreading of new cases of Covid-19 from other regions in Indonesia. The aforementioned fact and measure are positive things to remark, in our view.
Iɴᴅᴏɴᴇsɪᴀ sᴛʀᴏɴɢ ɪɴғᴏʀᴍᴀʟ sᴇᴄᴛᴏʀ
That the government was relatively early to have shifted the country’s budget more into basic consumption against tertiary projects bode well with domestic economic traits. Being relatively lower per capita income as compared to the neighboring countries, informal sectors has played a significant role in supporting the economy. Thus, both the shifting of the budget by the government as social aid during Covid-19 pandemic as well as the contribution of private group conglomerates is expected to support private consumption, one major support of Indonesia economic this far.
Sᴏᴜɴᴅ ᴀɴᴅ sᴛᴀʙʟᴇ ʙᴀɴᴋɪɴɢ ᴀɴᴅ ᴍᴏɴᴇᴛᴀʀʏ sᴛᴀᴛᴜs
As Indonesia has learned its lesson from the 1998 crises debt level as compared to income for both corporate and national scale have decreased. At the other end, consumers surveys by BI has indicated that most Indonesian population spend disposable income mostly on consumption (60%-70%), saving (15%-20%), and the rest for debt repayments. This implied prudence also has been maintained in the household scale. This factors have enabled monetary tools to be more effective, in our view, leading to a sound and stable banking and monetary status in the country level. This, ultimately has afforded BI to observe an attractive yield differential for some time. Which is also a positive factor to ponder by the investors.
Lᴇss ʀᴇʟɪᴀɴᴛ ᴏɴ ɪɴᴛᴇʀɴᴀᴛɪᴏɴᴀʟ ᴛʀᴀᴅᴇ
Compared to other countries, Indonesia, as being the world with the 4th most populated country has been able to be more domestic reliance. This also a supporting trait during a crisis.
The above arguments being said, among other, it is not impossible for Indonesia to pass the new normal and get back to normal growth rate, and higher in the immediate foreseeable future,
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,