The IMF-WB Annual Meeting Officially Close on Sunday (14/10) - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Good morning. The mood was rather grim at the International Monetary Fund-World Bank Group Annual Meeting which ended on Sunday (15/10), as policy makers across the world raised concerns over worsening global economic conditions.

The ongoing trade war between the United States (US) and China is the chief cause of those concerns, with attendants of policymakers from the world’s two largest economies adding special significance to the meeting.

Steven Mnuchin, the US Treasury Secretary, was dismissive on the shared concerns over the escalating trade war, putting a positive spin by saying that forcing China to be more open will be good for the world. Giving a clear indication on what the US administration seeks in trade deals, a clause on currency must be included in any future talks, Mnuchin.

Responding to the US concerns, People Bank of China’s Governor Yi Gang said the world’s second largest economy will not engage in competitive currency devaluation. The Chinese currency will be maintained at ‘broadly stable at an adaptive equilibrium level’, he added.

The biggest concern that arose from the meeting is a revelation by Mnuchin that a bilateral meeting between US President Donald Trump and Chinese President Xi Jinping on the sideline of the G20 Summit in Argentina at end of November is certain. This would further dampened the sentiment of the market, which sees that the lack of direct contacts of policymakers from both nations is a cause for concerns.

Domestically, market will anticipate the release of Indonesia trade data for September. Moody’s Analytics estimated a trade deficit of US$830 million in September, narrowing from US1.02 billion in August.

Market observers, however, may look into signs on whether the government’s policy responses to counter the falling Rupiah has any effect on Indonesia’s trade balance. The policy responses include curbing imports of capital and consumer goods and expanding the mandate of biodiesel policy to lower oil import.

This week, China will announce its GDP in third quarter of 2018, include inflation, fixed investment, factory output and retail sales. Beside that, Japan and Singapore also will announce trade data while US FOMC minutes, out and sales updates, plus Euro area inflations, UK price and job data also comes out this week.

The Rupiah rebounded and ended at 15,194 per US$1 on Friday, slightly lower than the level of 15,193 per US$1 at the start of the week. The week’s high was reached on Thursday at 15,253 per US$1.

But, the Jakarta Composite Index still in the positive zone, rose 0.43 percent to end the week at 5,756. The index’s gain was supported by domestic investors who are optimistic on the slew of corporate earnings to be released this week, countering the risk-off sentiments by foreign investors who net sold equity worth Rp4.2 trillion (US$289.65 million) throughout the week.

Oil price may rise this week on tension between the US and Saudi Arabia. Trump vows ‘severe punishment’ if Saudi Arabia is proven to have killed Jamal Khashoggi, a journalist who had been missing for two weeks. The Saudi government hit back, threatening for even ‘greater action’ if it is forced to retaliate.

Go to politics, election campaigning is intensifying, with both sides of political camps continue to throw attacks against each other. The ruling coalition continued to try highlighting the opposition’s recent mistakes by keeping a score.

The opposition camp, meanwhile, continue to frame its criticism surrounding economic issues. The opposition’s narrative might soon include global sportswear giant Nike, which just announced a cut on its global supply chain which will affect its businesses in Indonesia.

May you have a profitable day.

US$1: Rp14,500

Written by TIS Intelligence Team