Highlight Monthly Commentary - December 2020

Macroeconomics

December inflation was booked at 1.68% YoY where on a monthly inflation was booked at 0.45% MoM driven by food inflation while transportation inflation was modest due to stricter mobility restrictions.

November trade balance remained positive at USD2.6bn driven by positive export growth as a result of stronger CPO and coal prices.

Forex reserve was flattish at USD133.6bn in November while Bank Indonesia maintained its policy rate at 3.75% during the month.

Budget deficit was recorded at 5.60% of GDP as of November as tax revenue remains weak despite pick up in spending. 

Equity

JCI index had another strong month in December with a return of 6.5% MoM. Foreign investors posted outflow of USD278mn in December. The market was driven by further positive sentiments on vaccine as the US and the UK have started vaccination process using Pfizer’s vaccine. Meanwhile, the first batch of vaccine from Sinovac arrived in Indonesia pending approval from BPOM. However, rising COVID-19 cases globally ahead the year-end holiday caused concerns among investors.

Global equity market continued to book positive return in December despite rising COVID-19 cases globally. The strong performance was supported by positive news flow on vaccine as the US and the UK have started vaccination progress while Astra Zeneca also reported promising results on its vaccine trials. The US has also passed its long awaited fiscal stimulus after months of debate in congress. The UK and the EU have also came to an agreement on post-Brexit trade agreement.

Fixed Income

Fixed Income return was positive in December as the 10-year government bond yield fell further from 6.19% to 5.89%. The bond market also posted foreign inflow of USD176mn in December. Just as the equity market, the bond market’s rally was driven by positive newsflow on vaccine. The Fed’s continuous dovish statement also helped support the bond market amidst volatility from rising COVID-19 cases globally. Meanwhile, the US Treasury yield rose to 0.92% while the INDON30 yield closed at 1.99%.

 

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