Category: Market

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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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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External Trade in 2018 & Outlook (1)

Indonesia recorded trade deficit of US$8.57 billion last year against surplus of US$11.84 billion in 2017. Opposition picked up this as one of their campaign materials against president Joko ‘Jokowi’ Widodo. It is indeed the biggest in Indonesia’s history, but not necessarily the worst for the economy. 

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Optimism on Lending Growth

As stocks and rupiah gain early this year, the government is also optimistic that the banking sector would improve as reflected on some indicators. The central bank (Bank Indonesia/BI) said the financial system stability had been maintained as the bank intermediation function improves and the banking industry effectively contains credit risk.  

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