JAKARTA (TheInsiderStories) – Good Morning! The focus of the week will be the continued on the assessment of trade developments following the G20 summit and the implications for central bank policies. While, Bank Indonesia (BI) to release the Consumer Survey, Retail Sales, and Prompt Manufacturing Index for the second quarter of 2019 this week.
Followed a meeting of US’ President Donald Trump and China’ Xi Jinping, Chinese Prime Minister Li Keqiang announced a massive economic reform step, said China would cancel ownership control of foreign companies investing in the financial sector by 2020, a year ahead of the initial schedule of 2021.
China will also reduce restrictions on market access for foreign investors in value-added telecommunications services and the transportation sector. The plan to open access to foreign investment is also in line with the country’ intention to attract as many as possible Indian engineers, who are currently having difficulty obtaining visas to return to work in Silicon Valley.
In India, the government has launched a plan to increase foreign investment and fulfill its ambitious target to grow into an economy of $5 trillion by 2025, especially in the infrastructure sector, digital economy, in job creation.
The government also pledged to provide tax breaks and other benefits to encourage new companies, which helped generate jobs needed by India, because the unemployment rate jumped to a 45-year high.
While, the global slowdown has added to expectations that central banks around the world will increasingly adopt more dovish stances, not least the United States’ (US) Federal Reserves. Therefore, all incoming US data will be scrutinized for last-minute policy signals.
In Asia, trade developments will remain a key theme, with analysts eyeing the export performance of China and Taiwan in particular, as well as industrial production and machinery orders data for Japan and China’ vehicle sales.
With latest Caixin PMI surveys pointing to softening economic activity in the second largest economy during June, market participants will look out for further confirmation of weakening growth momentum in the June update of China’ trade data.
The advance estimate of Singapore’ second quarter GDP will be published. IHS Markit expects the economy to expand at an annual rate of 1.2 percent (SAAR), broadly similar to that in the first quarter.
At the policy meeting, Malaysia’ central bank is unlikely to decide a back-to-back rate cut after May’ decision, though there are room for further easing if needed. Rising external headwinds remain a key concern for the central bank.
Boris Johnson, a pioneer to replace Theresa May as prime minister this month, said Britain had to leave the European Union (EU) on Oct. 31 with or without agreement. In conjunction with the US, the EU strongly urged Iran to stop actions that would undermine the 2015 nuclear agreement.
The organization requested that Iran return to its commitment to deal with Joint Comprehensive Plan of Action participants, an agreement between Iran and six countries. While, Iran’ deputy foreign minister Abbas Araqchi urged Washington to lift banking and energy sanctions against Tehran before attending Iran and P4+1 (Britain, China, France, Russian and Germany) talks.
From the country, BI recorded foreign capital inflows to Indonesian market had reached Rp170.1 trillion (US$11.98 billion) until July 4, 2019. The funds entered through the Government bonds Rp98.5 trillion, stock market Rp71.5 trillion and others on Bank Indonesia Certificates.
Then, the energy and mineral resources ministry announced, Indonesia’ coal price reference dropped by 11.73 percent to $71.92 per metric ton in July from $81.48 per metric ton in the previous month. The decline was due to the external factors, particularly a production increase in China, import cuts by India and the trade war.
Coal prices have decreased since September 2018. In August 2018, the HBA was still recorded at $107.83 per ton. Beside, oil palm farmers complained about the fall of the fresh palm fruit price to Rp120-150 per kilogram from the normal price of around Rp600-700 a kilo.
One of these was triggered by the implementation of a palm oil export levy of $50 per ton by the government through the Palm Oil Plantation Fund Management Agency. In addition to the existence of palm oil levies, the biodiesel program is also seen as one of the causes of the fall in oil palm fruit bunches at the farm level.
Concerning the earthquake, the Meteorology and Geophysics Agency has just announced an earthquake with magnitude 7.1 shaking Ternate islands, North Maluku. However, it is not yet known the impact that caused casualties or damage to buildings.
This week, the Jakarta Composite Index is expected to depart for the green zone which is supported by optimism regarding the release of economic data. In late trading, JCI closed down 0.23 percent or 2.49 points at 6,373. During the week the index grew 0.23 percent and throughout the year appreciated 2.89 percent.
Furthermore, Rupiah against the US dollar managed to strengthen in the spot market trade last weekend to the level of 14,100, up 0.39 percent compared to the position of the trading closing the previous day.
May you have a profitable week!
Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia