€¦ · Web viewMoody’s Investors Service’s external vulnerability index -- which is the ratio of short-term debt, maturing long-term debt and non-resident deposits over one

Weekly Report May 28 – Jun 01, 2018By :Ana DairianaEmail : [email protected]

STOCK MARKET

Source : Indonesia Stock Exchange

Last week JCI Closed down to the level of 5,983.59. Pressure comes from global after the release of the U.S. labor data. Unemployment rate hit the position of 3.8%, the lowest in last 18 years. This condition triggers global markets' concern that the Fed should raise the pace of monetary tightening. positive sentiment in global and domestic outlook. From the domestic outlook, the growth of 8.9% in national loan indicates that the domestic economy is in good-enough condition amid the pressure from the global financial markets. the release of May's inflation will be the main focus for investor. Historically, Ramadhan season gives pressure to the Indonesian inflation.

The global markets will await the release of U.S. PCE deflator indicating whether the trend of 2% inflation is consistent or temporary circumstances. This backdrop causes global investors to perform wait-and-see acts. However, the downtrend of depreciated rupiah will curb the risk of bearish JCI in this week The Analyst from Vibis Consulting Asindo Situmorang forecast JCI for this week between the support level at 5,886 – 5,780, while the resistance level at 6,080 – 6,180. After reaching 14.209 per dollar, rupiah is appreciated. We estimate that Bank Indonesia’s massive monetary tightening under the administration its new Governor Perry Warjiyo will curb the significant trend of depreciated rupiah. Warjiyo focuses on the monetary policy emphasizing on the stable financial system.Rupiah exchange rate resistance level at 13,845 -13,920, while the support level at 13.752 -13,681.

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USD/IDR Exchange Rate

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Indonesia Stock Exchange, Weekly Statistics, May 28 – June 01, 2018

Source : Indonesia Stock Exchange

WEEKLY NEWS SUMMERY

BI 7-day Reverse Repo Rate Raised by 25 bps to 4.75%: Pre-emptive Policy to Strengthen StabilityThe BI Board of Governors agreed on 30th May 2018 to raise the BI 7-day Reverse Repo Rate by 25 bps to 4.75%, while also raising the Deposit Facility (DF) and Lending Facility (LF) rates by 25 bps to 4.00% and 5.50% respectively, effective 31st May 2018. Bank Indonesia made the policy as pre-emptive, front-loading, and ahead-of-the-curve moves to strengthen stability, especially exchange rate stability against a higher than expected Fed Fund Rate

(FFR) hike and increasing risk in the global financial market. Bank Indonesia believes that Indonesia’s overall economic condition is considerably sound and strong. Pressures on stability which begun in February is mostly related to the trend of FFR hike as well as increased global uncertainty due to policy change in the US and a number of geopolitical risks. Moving forward, Bank Indonesia will continue to calibrate updates in the global and domestic economy to make use of available room to raise policy rate, in a measured way.

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(BI Press Release. May 30, 2018)

S&P Affirmed Indonesia’s Sovereign Credit Rating at BBB-/Stable Outlook (Investment Grade)

Standard and Poor’s (S&P) has affirmed Indonesia’s Sovereign Credit Rating at investment grade level, as announced on May 31st, 2018.In its press release, S&P affirmed Sovereign Credit Rating of the Republic of Indonesia at BBB- /stable outlook. The key factors that support the decision are the government's relatively low debt levels and its moderate fiscal performance and external indebtedness. General government debt ratio to GDP over the next few years is projected to be stable, reflecting the relatively stable projected fiscal balance. Moreover, improved tax collections following the latest tax amnesty and higher energy prices should help government revenue.On the external front, current account deficit is expected to shrink in the next few years reflecting steady global demand and higher commodity prices. At the same time, the rupiah flexibility together with prudential policy measures to manage the risks of private sector short-term external borrowing have supported the decline of the ratio of gross external financing needs to current account receipt (CAR). Furthermore, the risk of a marked deterioration in the cost of external financing that Indonesia faces has diminished significantly(BI Press Release. May 30, 2018)

India, Indonesia among Asia's most debt risky nationsIt’s no surprise that India and Indonesia are among the worst-hit Asian currencies this year when you look at their foreign debt exposure and the level of reserves they have to cover that. Moody’s Investors Service’s external vulnerability index -- which is the ratio of short-term debt, maturing long-term debt and non-resident deposits over one year calculated as a proportion of reserves -- puts Indonesia at 51 percent and India at 74 percent.Malaysia and the Philippines are the odd ones out: the ringgit has gained this year even though Malaysia is among the most debt risky in Asia, while the Philippines has low foreign exposure but a currency that’s the second worst-performer in Asia, down almost 5 percent against the dollar. Tighter global financial conditions is making it more expensive to refinance foreign debt and adds to pressure on currencies. In some countries, including Indonesia and the Philippines, yields have risen, Moody’s said. However, the extent of depreciation and more generally, tightening in financing conditions, is nowhere similar in magnitude compared with the taper tantrum in 2013, it said (The Jakarta Post. May 30, 2018)

PROPERTY

Sinarmas Land and Kawan Lama Group will develop a mixed use project

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The two companies will start a joint venture with the development of an integrated area in Kota Wisata Cibubur, East Jakarta with an area of 8.5 hectares (ha). The project contains shopping centers, apartments and hotels. Shopping center with the flag of Living World becomes the first project they will build.

According to the design, Living World in Kota Wisata Cibubur occupies a building area of 90,000 square meters (m²). Timing of tinga pancang alias groundbreaking in the first quarter of 2019. Meanwhile, the completion of development target in the first quarter of 2021. The investment value of Living World in Kota Wisata Cibubur is Rp 1.2 trillion. The composition of ownership of shares in the project consists of 40% Sinarmas and 60% Kawan Lama Group.(Kontan. May 25, 2018)

PP Property offers four wholesale projects

PT Pembangunan Perumahan Properti Tbk ata PP PP Properti is exploring the sale of four projects secarar bulongan atawa bulk sales. The total value of the project is more than Rp 650 billion.

Details, housing project for employees of PT Aneka Tambang Tbk aka Antam in South Tangerang worth Rp 150 billion. So, in early June, PP Property will sign the cooperation with Antam to build a dwelling.

Then, the apartment project Ma-Zhoi on Jalan Margonda, Depok, West Java. The project will consist of three towers on a development site of approximately 1 hectare (ha). The location is behind the Margonda Road filling station. Another project is an apartment in the area of Kertajati Airport, Majalengka, West Java. The total area of development of Kertajati apartment project is 300 ha. The first phase is the construction of four apartment towers with a capacity of 1,100 units

PP Property plans to sell one tower worthRp 250 billion in volume to PT Samander Bisnis Nusantara. PPRO, also intends to sell the apartment project Begawan Tower 2 to PT Dipa Karya Sejahtera. The value is Rp 250 billion.(Kontan. May 25, 2018)

Other : BCA continues search for acquisitionsThe country’s largest private lender, Bank Central Asia (BCA), will still include in its business strategy this year plans to acquire smaller lenders after failing to find a suitable candidate last year. After the acquisition, BCA said it would support the acquired bank in going digital, both for its products and services. It has already prepared a variety of advanced and up-to-date digital banking services for the move, such as an application platform interface (API).Last year, Southeast Asia’s largest lender by market value after DBS

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Group Holdings Ltd. set aside some Rp 4 trillion (US$285 million) to finance the acquisition of mid-sized banks (The Jakarta Post. May 30, 2018)

Trainmaker signs more purchase agreements with Philippines

After signing an agreement in January, state-owned train manufacturer PT Industri Kereta Api (INKA) signed on Monday another purchase agreement with Philippine National Railways (PNR). The agreement consists of the purchase of four sets of diesel-powered trains with a value of US$21.4 million, as well as the purchase of three locomotives and 15 passenger trains with a total value of $26.1 million. The trains will be delivered gradually from Jan. 18 until May 27, 2020.

Previously, INKA and PNR also signed a purchase agreement for two sets of diesel-powered trains in January with a contract value of $9.7 million. INKA also announced a deal worth Rp 1.3 trillion (US$92 million) to supply locomotives to Zambia, marking its first foray into the largely untapped African market.(The Jakarta Post. May 30, 2018)

Tokyo Century Acquires 5% Stake in Bank Nobu

Japanese financial services company Tokyo Century Corporation has acquired a 5 percent stake in Bank Nationalnobu, a small-sized lender controlled by the Lippo Group, Indonesia's largest integrated services group.

The shares were purchased from minority shareholders who acquired their shares before Bank Nobu listed on the Indonesia Stock Exchange (IDX) in 2013. The acquisition forms part of Tokyo Century's million-dollar foray into Indonesia's financial industry and digital economy, which will also see it strengthen its strategic partnership with the Lippo Group.Bank Nobu benefits from the breadth of Lippo's business, which includes township development, retail, shopping centers, hospitals, cable television and internet services.The lender is currently embarking on a digitization strategy and seeking to increase its capital to more than Rp 3 trillion ($214 million), which will allow it to expand its banking services. Tokyo Century's shareholders include the Mizuho Group and Itochu Corporation, which are involved in a health care venture with Lippo.(The Jakarta Global. May 30, 2018)

Adaro Energy is ready to "take" the Rio Tinto mine

Opportunity for PT Adaro Energy Tbk (ADRO) to control the coal mine owned by Rio Tinto in Australia more open. Lately developments, ADRO and EMR Capital have obtained permission from the Australian government to acquire 80% of Rio Tinto's Kestrel coal mine.ADRO targets financial closing of the acquisition transaction to be conducted in the third quarter of this year. ADRO and EMR Capital will need US $ 2.25 billion to acquire the quarry located in Queensland, Australia.

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ADRO management said that about 30% -40% of the total acquisition fund needs will come from internal funding. The rest comes from bank syndicated loans. The appointed banks are foreign banks and local banks, such as Bank Mandiri. (Kontan. May 31, 2018)

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€¦ · Web viewMoody’s Investors Service’s external vulnerability index -- which is the ratio of short-term debt, maturing long-term debt and non-resident deposits over one