Asia equities gained on Monday (Jan 8) and are poised to gain today along with global markets. Japanese traders returned from holiday, and shares in the United States’ recorded new all-time highs. The dollar climbed and oil held above $61 a barrel. Crude oil rose 0.75% to US$61.90 per barrel yesterday. Signs of financial-market stress continue to abate at the start of 2018 amid optimism that lower U.S. taxes and a broadening global economic recovery justify record high prices for global equities, Bloomberg reported.
In Europe, data showed confidence in the euro continued its advance at the end of 2017. The euro has been restrained by concerns on Germany’s continued struggle to form a government. Other main events to watch for this week include US inflation data, China’s producer and consumer prices data, and talks between South Korea and North Korea set to take place.
Attention in the United States now turns to the quarterly earnings season, with investors expecting to focus on what U.S. companies will say about the recently approved tax overhaul and corporate tax cuts, Reuters reported.
On the domestic front, the stock market extended gain on Monday as the composite index of the Indonesia Stock Exchange (IDX) rose 0.5% to close at 6,385.4. Foreign investors, for six consecutive trading days, booked a net buy of Rp270.3 billion yesterday, bringing year-to-date net buy to Rp1.41 trillion.
The rupiah continued to strengthen to Rp13,397 against the U.S. dollar, as global investors built up their investment in Indonesian bonds. This might reflect a market reaction to good worldwide economic data. These data hint at solid economic growth prospects for 2018.
Investors have positive appetite for investing in Indonesia as they expect the country to maintain its economic growth this year. Indonesia’s central bank (Bank Indonesia/BI) reported that the capital inflow grew 9.5%, to Rp138 trillion in 2017 from Rp126 trillion in 2016, along with the improving investment climate. The positive investment grades awarded by global rating agencies (Fitch, Moody’s, S&P) have supported the investment development for Indonesia.
Meanwhile, the central bank (Bank Indonesia/BI) reported on Monday that Indonesia’s official reserve assets position stood at US$130.20 billion as of the end of December 2017, higher than the end of November 2017 level at US$125.97 billion. The increase was primarily attributable to foreign exchange receipts, among other from government’s issuance of global bonds as well as tax revenues and government oil & gas export proceeds. The receipts surpassed the uses of foreign exchange primarily for repayments of government external debt and BI foreign exchange bills matured during the period.
BI said that the reserve assets position at the end of December 2017 adequately covered 8.6 months of imports or 8.3 months of imports and servicing of government external debt repayments, well above the international standard of reserve adequacy of 3 months of imports.
Finance Minister Sri Mulyani also said her ministry expected the economy to grow 5.05% in 2017. In the fourth quarter (Q4) of 2017, the economy was projected to grow by 5.7%. This year, the economy would benefit from international events such as Asian Games and meeting of World Bank and International Monetary Fund (IMF) in Bali. The simultaneous election of regional leaders will also support public consumption in the second half of this year.
CORPORATE NEWS
AKR Corpindo (AKRA), the largest distributor of fuel in the private sector, has along with state oil and gas firm Pertamina is tasked to supply and distribute fuel for 2018-2022 period. AKRA will add fuel station storage, also tank storage capacity to 1.06 million kilo liters within next 2-3 years. AKRA and BP have signed a contract to set up a joint venture (JV) entity, PT Aneka Petroindo Raya for building storage station for fuel, targeting 350 units within next ten years.
Building construction firm Wijaya Karya (WIKA) Bangunan Gedung (WEGE) targets to book contracts of Rp7.83 trillion this year, higher than Rp7.32 trillion last year. It targets order book to reach Rp16.59 trillion this year, a 28.4% rise from 2017 target. WEGE also targets to book revenues of Rp5.19 trillion this year, a 28.8% growth compared to Rp4.03 trillion revenues targeted for 2017. While net profit is targeted to grow 38% to Rp394.5 billion this year. WEGE allocates capital expenditure (capex) of Rp667 billion for this year.
Golden Energy Mines (GEMS) is still waiting for the approval of state authorities in Indonesia and Singapore to finalize the acquisition of BSL Group. The completion of said transaction is extended to March this year. GEMS is also subsidiary of Singapore-based Golden Energy & Resources Ltd. BSL has a coal mining business permit (PKP2B) awarded by the Indonesian Government. GEMS, GMR Energy (Netherlands) BV, and GMR Infrastructure (Overseas) Limited signed a Supplemental Agreement to the Conditional Share and MCB Purchase Agreement in December last year.
DISCLAIMER: AUTHOR HAS NO POSITION IN STOCKS MENTIONED
By Yohannes Obor
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