Market Commentary - 3Q 2021

08/10/2021
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Macroeconomics

Number of active covid case reached its peak at the end of July 21 and went down to 36,141 cases by the end of 3Q21. Budget deficit as of Aug21 accounted for 2.32% of GDP vs 3.05% last year and FY21 target at 5.7%. Indonesia recorded a high trade surplus of USD 4.7bn in Aug21. 2Q21 GDP growth booked at 7.1% YoY compared to -0.7% YoY in 1Q21 thanks to domestic demand which reached 94% of pre-covid level. BI kept its policy rate unchanged at 3.5% and reiterated its pro-growth stance. IDR slightly appreciated by 0.23% to 14,328 vs USD.

Equity

JCI posted +5% QoQ gain by the end of September 2021. The index was trading sideways as Covid19 ravaging the Nation on the month of July-Aug; government’s fast response in strengthening the healthcare system and stimulus to the economy prevented the index going south. September was a turning point as government were relaxing the PPKM and sector rotation was seen in JCI. Profit taking was happening in technology sector; Old economies and Cyclicals were receiving inflows; and Energy sectors were gaining amid energy crisis in Europe and China that pushed the commodity price at its all times high. Foreign posted a net buy of Rp9.8tn in 3Q21.

The global market mainly declined yet European market was resilient in relative term. The US market and booked biggest monthly decline since March 2020 as Fed tapering pushed yield higher and pressured energy stocks, market stress as US debt ceiling deadline approaching, and concern of contagion effect from highly leveraged China property developers. The Asian markets were under pressure due to the resurgence of COVID-19 cases and slowing PMI. The European market had a good start yet hit on September as Europe was facing energy crisis as a combination of limited supplies, lower power generation from wind turbine and higher demand from economic reopening.

Fixed Income

Indonesia 10 years government bond yield declined from 6.59% at the end of June to 6.26% at the end of September. The bond market turned positive at the beginning of the quarter as the US unemployment rate went up to 5.9%, China’s PBOC stance of more accommodative monetary policy, and improving COVID-19 conditions in Indonesia. The yield started to climb at the beginning of September when the Fed signaled asset purchase reduction to happen soon and end around mid-2022 and Rate increase may be sooner. As of 3Q21, the government has issued Rp260.3tn through bond auction ~ lower than the initial target of Rp325.5tn. Based on bond flow data as of 30 Sept, Foreign ownership in bond was at 21.6% with total outflow Rp19tn MTD, outflow of Rp15.8tn in 3Q21, and outflow of Rp12tn YTD.

 

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Read full report3Q-2021-Highlight-Market-Commentary-EN-WEB
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DISCLAIMER

INVESTMENT IN MUTUAL FUND INVOLVES RISK. PRIOR TO DECIDING TO INVEST, PROSPECTIVE INVESTORS MUST READ AND UNDERSTAND THE FUND PROSPECTUS. PAST PERFORMANCE DOES NOT GUARANTEE / INDICATE FUTURE PERFORMANCE.

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