The JCI October 2, 2020

𝐎𝐜𝐭𝐨𝐛𝐞𝐫 𝟐, 𝟐𝟎𝟐𝟎

* 𝐓𝐡𝐞 𝐉𝐂𝐈 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 𝐫𝐚𝐧𝐠𝐞: 𝟒,𝟗𝟑𝟓𝐩𝐭 – 𝟓,𝟎𝟐𝟓𝐩𝐭  (𝐘𝐞𝐬𝐭𝐞𝐫𝐝𝐚𝐲 𝐜𝐥𝐨𝐬𝐞: 𝟒,𝟗𝟕𝟎𝐩𝐭)

* 𝐒𝐭𝐨𝐜𝐤 𝐈𝐧𝐝𝐞𝐱 𝐟𝐮𝐭𝐮𝐫𝐞𝐬 𝐩𝐨𝐬𝐭𝐞𝐝 𝐥𝐨𝐬𝐬 𝐨𝐟 𝐬𝐨𝐦𝐞 𝟎.𝟐% 𝐰𝐢𝐭𝐡𝐢𝐧 𝐨𝐩𝐞𝐧𝐢𝐧𝐠 𝐭𝐢𝐦𝐞 𝐚𝐟𝐭𝐞𝐫 𝐇𝐨𝐮𝐬𝐞 𝐩𝐚𝐬𝐬𝐞𝐝 𝐭𝐡𝐞 𝐔𝐒𝐃𝟐.𝟐𝐭𝐫 𝐂𝐎𝐕𝐈𝐃-𝟏𝟗 𝐫𝐞𝐥𝐢𝐞𝐟 𝐛𝐢𝐥𝐥 𝐩𝐚𝐜𝐤𝐚𝐠𝐞. 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐩𝐞𝐫𝐜𝐞𝐢𝐯𝐞𝐝 𝐭𝐡𝐞 𝟐𝐧𝐝 𝐂𝐎𝐕𝐈𝐃-𝟏𝟗 𝐬𝐭𝐢𝐦𝐮𝐥𝐮𝐬 𝐛𝐢𝐥𝐥 𝐰𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐠𝐨 𝐭𝐡𝐫𝐨𝐮𝐠𝐡 𝐭𝐡𝐞 𝐑𝐞𝐩𝐮𝐛𝐥𝐢𝐜𝐚𝐧 𝐝𝐨𝐦𝐢𝐧𝐚𝐭𝐞𝐝 𝐒𝐞𝐧𝐚𝐭𝐞.

* 𝐓𝐡𝐞 𝐉𝐂𝐈 𝐢𝐬 𝐞𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐭𝐨 𝐟𝐥𝐮𝐜𝐭𝐮𝐚𝐭𝐞 𝐚𝐧𝐝 𝐬𝐮𝐩𝐩𝐨𝐫𝐭𝐞𝐝 𝐛𝐲 𝐬𝐭𝐚𝐛𝐥𝐞 𝐔𝐒𝐃𝐈𝐃𝐑

Morning,

The Jakarta Composite Index (JCI) today (10/2) is expected to be within the range of 4,935pt – 5,025pt, likely to consolidate given the current grim outlook of COVID-19 new cases to end. Meanwhile, yesterday (10/1) the DJIA closed higher by  35 points or 0.1% to 27,817pt, while S&P500 and the Nasdaq both edged up by  0.5% and 1.4%, respectively.

𝐒𝐞𝐩𝐭𝐞𝐦𝐛𝐞𝐫 𝐢𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐫𝐚𝐭𝐞𝐬, 𝐥𝐨𝐰𝐞𝐫 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐢𝐧𝐠 𝐩𝐨𝐰𝐞𝐫 𝐨𝐫 𝐡𝐢𝐠𝐡𝐞𝐫 𝐬𝐚𝐯𝐢𝐧𝐠, 𝐨𝐫 𝐛𝐨𝐭𝐡

Indonesia CPI rates for the month of September 2020 came in with an increase of 1.42% YoY (2019:3.39% YoY, 2018: 2.88%). On a month-on-month basis, September reading came in with a rate of deflation of 0.05% (August: -0.05% mom, July: 0.1% mom).

Extracted from a 3 (three) latest reading of the CPI movement are as follows. 1) Personal maintenance and Other services (PMO), 2) Outside dining (OD), and 3) Educations  are three main spending that support consumptions.

1) In September,   PMO registered an annual inflation of 6.97% YoY  (August:7.47%, July:6.1% YoY) against headline of 1.42% YoY, and headline MoM of deflation of 0.05%.  On a MoM basis, PMO in September posted an inflation rate of 0.25% (August: 2.02%, July: 0.93%).

2) OD , in September recorded  an annual inflation rates of 2.37% YoY (August:2.45% YoY, July:2.57% YoY) against the headline of 1.42% YoY, and headline MoM deflation of 0.05%. On a MoM basis, OD posted 0.13% inflation rate (August:0.13%, July:0.15%)

3) Education spendings in September posted an annual price gain of 1.34% (August:1.61%, July: 2.66%).

The above readings bode well with the latest consumer survey by the central bank Bank Indonesia  whereby in August, Consumption spending declined to 67.4% of total spendings vs. at 69.2% in February before the general PSBB, debt repayment spending decreased to 12.2% vs. 12.8% in February, while saving increased to 20.4% of total spending as compared to 18.1% in February.

The above pattern applied to all five income brackets under survey, except of the highest one, that is of the group of respondents of income of above IDR5mn/month. This group showed a saving rates in August decreased to 18% of total spending vs. 18.4% in February before the COVID-19 spread limitations.

The above brief readings imply that should the COVID-19 uncertainties give signs to subside, the other 4 (four) income groups are expected to spend higher, so as the highest income group.

Ultimately, the above narration may suggest that current deflation rates not totally due lack of purchasing power.

At the other end, yesterday  the WTI price closed lower by 3.8%  at USD38.7/barrel as compared to the previous one. Oil market had the impact of weaker outlook on demand due to the COVID-19 increasing spread risks.  Madrid will go into lockdown next week, while Moscow’s companies will have only 50% of operational capacity.  Meanwhile the USDIDR  closed  at IDR14.876  vs. IDR14.918 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,