G20 Finance Ministers and Central Bank Governors Meeting - Photo by G20

JAKARTA (TheInsiderStories) – Good Morning! The dovish tilt to global policy making continued in October with the United States (US) Federal Reserves cutting rates for the third time. But whether this represents the end of the easing cycle could be dependent on how economic growth fares in the fourth quarter.

In this respect, global Purchasing Manager Index (PMI) data will give a comprehensive picture of how the world economy started the closing quarter of 2019. In the eurozone, final PMI data and key industrial numbers for Germany will give a steer to the region’ economic health, with a risk of Germany slipping in to recession likely to fuel debate on the need for stimulus.

In Asia, the PMI surveys will be in particular focus for signs of trade war impact and fresh news on Hong Kong SAR’s recession. Monetary policy decisions are meanwhile awaited for from Australia, Malaysia and Thailand, while Indonesia and the Philippines will release their third quarter GDP data.

Indonesian finance minister Sri Mulyani Indrawati projected the country’ economic growth in the third quarter of 2019 to be at the level of 5.05 percent, same with second quarter’ level which indicates the economy is growing stagnant.

She hope that growth in household consumption will still be around 5 percent to support overall economic growth caused the investment growth slowing down to grow at the level of 5 percent in the third quarter of 2018.

The Association of Indonesian Automotive Industries projected that national car sales still reach around 1 million units in 2020. The secretary general, Kukuh Kumara, said the indication of improved sales was based on sales performance that began to improve towards the end of this year.

As of September total vehicle sales in the domestic market recorded 753,594 units from the same period in the previous year, the figure decreased by 12.03 percent.

On trade issues, US President Donald Trump said he would sign a trade agreement with Chinese President Xi Jinping in the state of Iowa. Previously both leaders to sign the pact at the Asia Pacific Economic Cooperation summit in Santiago Chile on Nov. 16 – 17, but the plan was shattered after Chile withdrew as the host of the meeting.

On Friday, Indonesian Rupiah closed up 0.03 percent to 14,039 and Bank Indonesia’ middle rate weakened 0.41 percent to 14,066 per US dollar. The Jakarta Composite Index (JCI) corrected 0.35 percent to the level of 6,207.

Some analysts assessed the Rupiah and JCI correction due to profit-taking action. In addition, sentiment from inflation in October could be a driver of the local currency, they adds.

From global side, data from the US which are under projections will become a burden on the US Dollar and could drive the strengthening of Rupiah. Some unsatisfactory US data is unemployment claims in the week ending Oct. 25 reached 128,000. The US labor statistics bureau also reported, the average hourly wage last month rose only 0.2 percent. 

Additional support for the rupiah also comes from China’ doubts about the effort to negotiate a trade agreement with the US because the Washington still reluctant to lower import tariffs more deeply. While, the development of the British plan to exit the European Union (EU) is still become a concern for the investors at the beginning of the week.

They added that the PMI for European regional countries was also observed by the market. If the results are good, the Rupiah and JCI can go up. If the results fall, the stock market will be depressed.

With all the various data, some observers sees, the Rupiah will move in the range of 14,020 to 14,080. And the JCI has the potential to weaken again if it breaks at 6,200 and move between 6,170 – 6,250.

The analysts recommended shares of PT Gudang Garam (IDX: GGRM), PT HM Sampoerna Tbk (IDX: HMSP), PT Perusahaan Gas Negara Tbk (IDX: PGAS), PT Telkom Indonesia Tbk (IDX: TLKM), PT Bank Tabungan Negara Tbk (IDX: BBTN), PT Waskita Karya Tbk (IDX: WSKT), PT PP Tbk (IDX: PTPP), and PT Wijaya Karya Bangunan Gedung Tbk (IDX: WEGE) to be watch for today.

May you have a profitable week!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia