Highlight Monthly Commentary - June 2021

Macroeconomics

June inflation was booked at 1.33% YoY where on a monthly basis inflation was booked at -0.16% MoM, implying deflation, due to high base effect on food inflation post Lebaran festive season. May trade balance remained positive at USD2.4bn driven by strong commodities exports. Budget deficit reached 1.32% of GDP as of May. Forex reserve rose to USD137.1bn in June while Bank Indonesia maintained its policy rate at 3.50% during the month.

Equity

JCI index remained volatile in June with a flattish return of 0.6% MoM. Foreign investors posted inflow of USD344mn in June. The market faced pressure from the Fed’s hawkish statements after the US released May inflation data of about 5%. Meanwhile, resurgence of COVID-19 in Indonesia at new records also posed volatility. Despite so, foreign investors still posted inflow while retail investors also flocked back into the equity market and supported the index.

Global equity market posted mixed returns in May. The US market mostly recorded positive returns on the back of improving market data as well as President Biden reaching agreement with bipartisan senators on the USD579bn infrastructure stimulus. The European also posted positive return as economy reopens while vaccination in the EU is progressing fast. The Asian markets were under pressure due to new wave of COVID-19 which prompted stricter mobility restrictions in many countries in the region.

Fixed Income

Fixed Income market’s performance was negative in June as the 10-year government bond yield rose from 6.43% to 6.56%. The bond market posted foreign inflow of USD1.3bn in June. We continued to see foreign inflows and improving auction demand during the month. However, the new COVID-19 wave in Indonesia caused pressure to the market along with the Fed’s recent hawkish statement. Meanwhile, the US Treasury yield fell to 1.47% while the INDON31 yield closed at 2.08%.

Disclaimer

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