Category: Business

Market & Rates

Global stock indexes rose on Thursday (Jan. 17) as optimism over a resolution to the trade war between the United States (U.S.) and China lifted sentiment. The second referendum on Britain’s membership in the European Union also influenced the markets. Wall Street closed moderately in the green on  Jan. 17, as a report said that the United States was considering easing China’s tariffs during negotiations.

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Investment Stories of 2019: Coal Gasification

One step closer to reality! Bukit Asam, Pertamina, and Air Products and Chemicals Inc (USA) have on Wednesday (Jan 16) signed agreement for the establishment of joint venture company to process coal into dimethyl ether (DME), an alternative for liquified petroleum gas (LPG). This will be the first major initiative to add value to Indonesian coal resources. 

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State Capitalism: Coal

We’ve seen strong State capitalism in oil & gas where most expired blocks have been granted to or taken over by Pertamina in the past few years. Acquisition of Freeport Indonesia, one of the world’s largest gold and copper producers, by INALUM is also seen in this context. INALUM has also been strengthened with the government’s decision to give some nickel blocks previously controlled by Vale Indonesia to its subsidiary Aneka Tambang. 

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Coal Journal

Thermal coal rose 1.92 to US$99.20 per ton on Wednesday (Jan. 16) but declined 6.12% yearly. Natural gas fell 2.94% yesterday, but rose 5.43% annually, helping thermal coal prices. The global supply-demand concerns remain a concern.

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Market Snapshots

Global markets extended gains on Wednesday (Jan 16) with gains in the United States (U.S.) equities supported by signs of a better-than-expected start to the earnings season, which then countered concerns about rising U.S.-China tensions.

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Bank Update

The central bank (Bank Indonesia/BI) indicates that new loan or credit increased in the fourth quarter (Q4) of 2018 as demand for all segments (working capital, investment, consumption) accelerated from the previous quarter. That said, it might slow in Q1 of 2019 for a cyclical reason, slow demand early in the year.

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Corporate Actions: Renuka Coalindo

Renuka Coalindo (SQMI), a company engaging in coal trading and shipping, is set to launch a rights issue program for 18.83 billion new shares, representing 98.43% of its enlarged shares capital. The exercise price is set at Rp250 per share. The Company would thus raise Rp4.71 trillion in total. Each shareholder with 50,000 old shares, recorded at Jan 24, 2019, is entitled to buy 3.12 million new shares. Trading of rights is scheduled for Jan 28 to Feb 1, 2019.

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External Trade in 2018 & Outlook (2)

Other than the record trade deficit, opposition will likely exploit imbalances in Indonesia-China relationship. This is related to US$20.85 billion of deficit in non oil and gas trading with China last year, expanded by 47.2% from 2017. The deficit was mainly attributable to slower export growth of 14.3% than import growth of 27.4%. 

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Market Rally

The global markets climbed on Tuesday (Jan 15), helped by hopes of more stimulus for China’s economy, including investment projects and local government bond issuance improved sentiment. Stocks in Shanghai and Hong Kong surged almost 2% after the United States (U.S.) President Trump talked up chances of a China trade deal, and Chinese officials then came out in force hinting at more stimulus for their slowing economy, Reuters reported. That came a day after data on Monday showed China’s exports unexpectedly fell the most in two years in December, while imports also contracted sharply.

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M&A Updates

Vale Indonesia (INCO) plans to divest 40% of their shares this year as required by the Government of Indonesia. VALE has divested 20% of its shares to the public, and so it must divest another 20%.

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