JAKARTA (TheInsiderStories) – Good Morning! A busy economic calendar this week, starts with Statistic Indonesia February’ inflation report and foreign exchange reserves on Friday. Last January, the inflation rated stood at 0.39 percent month to month and in annual basis at 2.68 percent.
Markets will be eager to see a fuller insight into economic trends amid the coronavirus outbreak. The shockingly weak data is likely to add to fears that the world’ second largest economy may not rebound as quickly as investors had initially hoped.
In Asia, China factory activity (PMI) contracted at its fastest ever in February, even worse than during the global financial crisis of 2008. While, Japan’ PMI was hit by its sharpest contraction in nearly four years in February, raising a red flag over manufacturing in the world’ third-largest economy as the impact from the virus outbreak.
The Jibun Bank Japan Manufacturing PMI slipped to a seasonally-adjusted 47.8 from a final 48.8 in the previous month. The February reading was its lowest since May 2016. Another report on Sunday showing that South Korean exports snapped a 14-month losing streak in February masked disruptions from the coronavirus, reflected outside the headline figures.
From United States (US), the coming days will reveal whether the outbreak is accelerating in the world’ biggest economy, how much the government is prepared to deal with an epidemic, and the economic damage in other countries. Investors will also be closely watching comments from Federal Reserve (Fed0 policymakers this week, with the prospects of a March rate cut on the rise.
Fed Chairman Jerome Powell said on Friday that the US central bank will “act as appropriate” as the virus poses “evolving risks” to the economy. Friday’ US jobs report is likely to be overshadowed by the market turmoil.
The race for the Democratic US presidential nomination could divert some attention from the spread of the coronavirus. And the Bank of Canada may surprise investors with a rate cut at its meeting on Wednesday.
Organization of the Petroleum Exporting Countries (OPEC) and its allies is to meet in Vienna on Thursday and with oil prices now down 25 percent so far this year pressure for additional output cuts is mounting. Friday saw the lowest closes for Brent and WTI since December 2018.
For the week, Brent lost almost 14 percent, its biggest weekly percentage decline since January 2016, while WTI fell over 16 percent in its biggest weekly percentage drop since December 2008. The group has already slashed oil output by 1.7 million barrels per day (bpd) under a deal that runs to the end of March. In an initial response to counter the hit of the virus, an OPEC+ has recommended deepening output cuts by 600,000 bpd.
Monetary policy meetings in Australia and Malaysia will also be keenly eyed for policymakers’ reaction to the coronavirus outbreak. Hong Kong SAR retail sales and China’ trade data are other notable releases, alongside fourth quarter GDP updates for Australia, Japan and South Korea.
Early flash PMI numbers indicated that business activity contracted in February for the first time since 2013 in part due to virus-related factors. In Europe, the final PMIs will be awaited for confirmation of the encouraging resilience seen in the flash PMIs.
The Britain continued to show a post-election rebound, and growth in the eurozone even picked up slightly. However, the surveys also found reports that the virus outbreak was causing supply delays and denting tourism numbers.
On Friday, in a meeting with President Joko Widodo with CEO of Japan’ Softbank Corp., Masayoshi Son and former British premier Tony Blair, Grab plans to create a city that combines the latest technology, intelligence Made, electric vehicle ecosystems, and payment technology in the capital city helped by Malaysia’ Grab Holdings. Son, Blair, and crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan will sit on the steering council for the construction of the new capital.
While, following the government policy to provide incentives to the tourism sector, the state airline PT Garuda Indonesia Tbk (IDX: GIAA) and its unit Citilink, have slashed prices on a number of routes from and to Batam, Denpasar, Yogyakarta, Labuan Bajo , Lombok, Malang, Manado, Toba, Tanjung Pandan and Tanjung Pinang starting March 1.
Last week, Indonesian Rupiah dropped significantly 4.06 percent to 14,318 and the middle rate of Bank Indonesia also weaken 3.32 percent to 14,234 against the US Dollar. In 10 trading days, the local currency has weakened 4.81 percent from Rp13,660 on Feb. 17.
The Jakarta Composite Index (JCI) also fell 2.69 percent to 5,452,704. The analyst rated, the external sentiment will still be the main weighting factor for both instruments on Monday. They assessed that the coronavirus and the outflow concern is still pressing both movement.
BI’ governor Perry Warjiyo, reported as of Feb. 27, total net foreign fund outflows amounted to Rp30.8 trillion (US$2.2 billion). Other sentiments that might affect the instruments were domestic data, such as manufacturing PMI which contracted 49.3 in January. In addition there is inflation data for Indonesia in February.
Today, they projected that Rupiah would be move in the range of 14,140 – 14,400 over the Greenback. An the JCI betwen 5,288 to 5,500.
The stocks recommended by the observer are PT Bank Central Asia Tbk (IDX: BBCA), PT Bank Mandiri Tbk (IDX: BMRI), PT Bank Rakyat Indonesia Tbk (IDX: BBRI), PT Indofood CBP Sukses Makmur Tbk (IDX: ICBP), PT Telkom Indonesia Tbk (IDX: TLKM), PT XL Axiata Tbk (IDX: EXCL), PT Indo Tambangraya Megah Tbk (IDX: ITMG), and PT Ciputra Development Tbk (IDX: CTRA).
May you have a profitable Week!
Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia