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Changes in market sentiment since the start of a trade war between the US
and China need to be a concern. Throughout 2019, the sentiments in the stock
market is still sourced from the surrounding conflict US trade - China, monetary policy
central banks, like the Fed and the ECB that affect the liquidity of the global
monetary, geopolitical situation in Europe related to the development Brexit, various
release of economic data, release performance of a number of issuers in a variety of
stock exchanges in the world as well as the elections in Indonesia and India.
Source: Bloomberg
Since the beginning of 2019, almost all stock exchanges in the world rose to
the highest gains experienced by China's Shanghai index rose 23.43
percent. Only the Malaysian stock market weakened during the 2019's. The
Composite Index rose by 4.21 percent to Rp6.455 until the end of April 2019 along
with the influx of foreign funds. On the other hand, the positive performance of global
stocks in general is driven by the hope of a trade agreement between the US and
China, so that when trade tensions re-heated in May, global stock performance trend
reverses.
Table 2. Performance of the Global Stock Most sectors JCI during 2019
Market up to 2019 * (%)
recorded a positive performance,
Janu Febr Marc Ytd.
Sector especially the financial sector and
ary uary h April *
JCI 5:46 -1.37 0:39 -0.21 4:21 infrastructure. Furthermore, in
finance 6:04 -1.33 3:21 2.76 10.98 January the entire sector showing
Consumer goods 3:56 -0.90 -1.39 -3.33 -2.17 strength and in the stock market,
Infrastructure 9.97 2.91 -2.36 -0.42 10:03 known as the January effect. Some
Trading 1.77 3:42 -0.20 0:48 5:56 other sectors that support JCI's
Basic industry 6.70 -3.27 -1.15 -6.30 -4.41 positive performance is the trade,
Construction and
Property 4:06 -2.61 2:43 4.68 8.67 construction and property, and
various
mining. Instead, the consumer goods
Industries 3.67 -11.91 1:25 2:52 -5.21
Mining 8:25 -2.52 -1.33 -3.80 0:16
sector, basic industries, various
Agriculture 6:23 -8.40 -3.86 -1.54 -7.88 industries, agriculture, and
Manufacture 4:40 -3.32 -0.93 -3.25 -3.25 manufacturing under pressure
Source: Bloomberg, processed; Note .: * till the end of
April 2019
cumulatively in 2019.
Financial sector
Along with JCI, the financial sector index still recorded a positive
performance up to April 2019 rose 10.98 percent. This is reflected in the
performance of financial institutions were also positive in March 2019. Bank credit
grew by 11.55 per cent (yoy), driven by growth in working capital loans. In terms of
raising funds, bank deposits grew by 7.18 percent (yoy). Financial services institutions
to April is also able to keep the risk profile is reflected in the gross NPL ratio of 2.51
percent.
Infrastructure sector
Infrastructure sector index recorded a growth of 10.03 throughout the
period January - April 2019.This strength is influenced by the news that the
company Smartfren (FREN) will merge with another telecommunications operator, PT
Indosat Tbk (ISAT). FREN-rumored merger ISAT likely to create a telecom company
that can offer a better service quality and effective. The telecommunications sector
will grow in line with infrastructure projects. Going forward, all regions in Indonesia
are expected to enjoy the use of the Internet and packet data.
Unlike the final quarter of 2018 and then, construction and property sector
indices posted gains of 8.67 percent during the 2019's.The data is supported
by the results of BI Residential Property Price Survey which indicates the increase in
residential property prices in the primary market. Residential Property Price Index
(IHPR) The first quarter of 2019 amounted to 0.49 percent (qtq), higher than the
increase in the previous quarter to 0.35 per cent (qtq). In the first quarter of 2019,
sales of residential property increased by 23.77 per cent (qtq), higher compared with
sales in the previous quarter decline of 5.78 percent (qtq). Discourse transfer of
capital outside Java assessed will give effect to the stock movement of this sector
because this removal will require the construction of office buildings and massive new
housing.
Mining industry
Until April 2019 this sector recorded an increase of 0.16 percent in the last
three months despite the sector under pressure.The sector's performance is
affected by fluctuations in global commodity prices such as crude oil and coal. From
within the country, the Government has taken several steps to improve the
production and coal, among others, the Ministry of Energy and Mineral Resources
(ESDM) which has implemented the Information Technology systems as a solution to
improved governance of mining, the Mining One Map Indonesia (MOMI), Mining One
Data Indonesia (MODI), and Mining Online Monitoring System (MOMS). The Ministry of
Energy and Mineral Resources has also made regulatory simplification, as many as 32
laws repealed or revised and 64 certifications or licenses have been revoked. Looking
ahead, the Indonesian Coal Mining Association (ICMA) will establish cooperation with
the China National Coal Association (CNCA) to enhance cooperation in investment in
the coal sector.
This sector weakened by 7.88 percent during January to April 2019. This is
effected by a decision of the European Union (EU) announced that biofuels which use
labeled unsustainable palm oil or unsustainable. EU law on sustainable energy states
that the use of food is not sustainable and food / feed crops should be restricted since
2019 and the next will be banned completely in 2030. This decision was taken after
the EU Commission concluded that the planting of palm oil, which mostly took place
in Indonesia and Malaysia, causing deforestation (deforestation). Until now, the
government of Indonesia and Malaysia was still seeking EU mediation to the parties
that this rule does not apply. Other than that, Malaysia's palm oil production is being
increased due to good weather the last two years as well as the expansion of oil palm
plantations in Malaysia. This condition can cause the price of CPO back down and
affect the movement of stocks the sector.
Manufacturing industry
In terms of trading volume, compared with the end of April 2018, there is an
increase in the total amount of outstanding government securities that can
be traded for Rp2.502,01 trillion as of the end of April 2019. Of these, as
many as Rp606,51 trillion or 24.24 percent are absorbed by the bank and by
Rp1.742,50 trillion or 69.64 percent of its purchased by non-banks, such as mutual
funds, insurance, non-resident companies, pension funds, and other individuals. Non-
resident investors' holdings in nominal terms increased by Rp302,94 trillion as of the
end of April 2019 compared to the same period last year. On the other hand, the
central bank at the end of the first quarter of 2019 was recorded at 132.03 trillion to
buy government bonds, government securities holdings increased again by Rp59,49
trillion at the end of April 2019 for the purpose of monetary operations. This is done in
order to stabilize the exchange rate.
In the primary market, the average supply (incoming bid) to enter the
auction for 2019 was Rp37,65 trillion. This amount is higher than the auction
period last year. Incoming incoming bid during the auction in 2018 was Rp27,87
trillion. The average awarded
tenor, tahun
10.00 250
9.00 200
150
8.00
persen
100
7.00
50
6.00
-
0.1 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930
5.00 (50)
4.00 (100)
biddecreased from Rp3,50 trillion in the period from January to April 2018 to Rp3,11
trillion in the period from January to April 2019, with a bid to cover ratio rose from
1.79 to 3.16. To record incoming bid in 2019 was recorded at the level of Rp93,93
trillion, that is at the fourth auction in February 2019, while incoming bid in 2018 was
the highest in Rp86,21 trillion figure, on January 5, 2018. The auction for the auction
during the month of April 2019, the highest number of deals signed during the month
stood at Rp56,11 trillion at a weighted average yield of 5.80 percent was won
between the SPN 3 months and 8.77 percent in PBS022. The bid to cover ratio during
an auction in April 2019 was in the range of 1.00 to 13.27.
Chart 11. Ownership of government securities from 2017 to 2018 (a) December
2018; (B) April 2019
Bank;
Lainnya 6%
20.32%
Lainnya; Perorangan Bank 24%
5.67%BI; 10.70% 3% BI 6%
Peroranga Reksadana; Dana Pensiun Reksadana
n; 3.09% 9% 4%
5.01%
Dana Asuransi 8%
Asuransi;
Pensiun;
Asing; 8.99%8.51% Asing 38%
37.71%
(A) (B)
120
100
80
Rp triliun
60
40
20
0
Lembaga Keuangan Nonba nk Tel ekomunikas i Energi Industri ki mi a das a r
Source: KSEI (processed)
Meanwhile, the fund raising activities of the public through the issuance of
debt securities by corporate growth slowed slightly during 2019 despite
this.At the end of April 2019, the total corporate bonds outstanding reached
Rp408,07 trillion, an increase of 2.51 percent (yoy) from Rp398,09 trillion at the end
of April 2018 and an increase of 1.52 percent compared to the end of December 2018
amounted to Rp401, 95 trillion. In other words, there are additional new bonds worth
Rp9,98 trillion during 2019. By sector, the top five issuers of corporate bonds is still
occupied by non-bank financial institutions (32.20 percent), banks (29.20 percent),
telecommunications ( 6.94 percent), construction (4.98 percent), and the energy
sector (4.76 percent).
Along with the increased flow of capital, in early 2019 Rupiah was moving in
positive territory and are at Rp14.215 per US dollar at the end of April. The
positive sentiment in the global economy as the Fed's policy dovish tend to decrease
the possibility of higher interest rates in 2019 and optimism for the trade agreement
between the US Government to encourage China to become a factor strengthening
Rupiah. However, the US Government's decision to re-impose tariffs on imports of
Chinese products on the market impact shock that resulted in capital flows, especially
from developing countries to save-haven assets.
After moving fairly stable during the first quarter 2019 to April 2019, the
rupiah to depreciate against the US dollar in May 2019. The weakening of the
rupiah was mainly influenced by external factors, namely the escalation of a trade
chart 13, Index Value Change and Developing Countries Index Save Haven Assets
1660 380
1650 375
1640 370
1630 365
1620 360
1610 355
1600 350
source: Bloomberg
States with China. In addition, the depreciation amount is also affected by seasonal
factors caused by the increased demand for the dollar for non-resident dividend
payment. The average exchange rate in May 2019 was Rp14.393 per US dollar, down
1.25 percent compared to the average of April 2019.
Graph 14. Growth Rates (a)% YTD May 31, 2019; (B)%, Mtd May 31, 2019
Rusia
Thailand
Jepang
Filipina
Indonesia
India
China
Singapura
Inggris
Vietnam
Malaysia
Uni Eropa
Korea Selatan
Turki
Argentina
-25 -20 -15 -10 -5 0 5 10
-4 -3 -2 -1 0 1 2 3 4
(A) (B)
INDONESIAN TRADE
20% 19000
10%
14000
0%
Pertumbuhan
9000
Miliar USD
-10%
4000
-20%
-1000
-30%
Total Ekspor (rhs) Total Impor (rhs) Pert. Ekspor (ytd)
-40% -6000
Pert. Impor (ytd)
-50% -11000
A
A
2019-J
J
J
2018-J
J
J
O
O
D
D
S
S
N
N
M
M
F
F
Source: Central Bureau of Statistics