Jakarta, CNBC Indonesia – Market participants were on alert on Thursday (17/6/2021) as seen from corrections in the stock market, money market, while yields (yield) government bonds strengthened. Today, the pressure is still great, especially triggered by the bad news of the pandemic.
Yesterday’s Composite Stock Price Index (JCI) closed with a depreciation of 10.1 points (+0.17%) to 6,068.44 after almost all day in the red zone. There were 327 stocks corrected, another 179 appreciated, and the remaining 145 were stagnant.
Transaction value recorded an increase of Rp 13.5 trillion, compared to Wednesday’s position (Rp 12 trillion). However, concerns surrounding taper tantrum– in the form of the flight of foreign funds to developed countries – in fact hit local investors, considering that foreign investors actually scored net purchases (net buy) IDR 181 billion in the regular market.
The foreign investors mainly bought shares in PT Merdeka Copper Gold Tbk (MDKA) of Rp. 133 billion and PT Bank Mandiri Tbk (BMRI) of Rp. 126 billion. On the other hand, the sale occurred in PT Perusahaan Gas Negara Tbk (PGAS) shares which were sold for Rp 36 billion and PT BFI Finance Tbk (BFIN) for Rp 34 billion.
The JCI correction followed global and regional trends, considering that the majority of Asian bourses also weakened yesterday, except for the Hong Kong and Chinese markets, which remained in the green lane, welcoming the release of China’s export data as of May which reported a 27.9% jump in exports on an annual basis.
The correction occurred in response to the announcement by the United States (US) central bank that it raised inflation expectations in 2021 and estimates that an increase in the benchmark interest rate can be done in 2023.
The Federal Open Market Committee (FOMC) meeting did not change its benchmark interest rate (Fed Funds Rate) at a level near zero, i.e. 0-0.25%, but indicated that two hikes could occur as soon as 2023.
Whereas in March, the Fed Chair, Jerome Powell stated that there would be no increase in the benchmark interest rate until at least 2024. Dot plot documents showing expectations of FOMC members indicated that the increase could occur twice in 2023.
Domestically, Bank Indonesia (BI) decided to maintain the benchmark interest rate at the Board of Governors’ Meeting (RDG), in line with market expectations. Collected market consensus CNBC Indonesia estimates that the BI 7 Day Reverse Repo Rate will be held at 3.5%.
However, investors in the money market choose positions short (selling) the rupiah, so the exchange rate for the Garuda currency fell almost 1% to close to Rp. 14,400/US$. At the close of trading, the rupiah weakened 0.81% to Rp 14,350/US$, which was also the worst in Asia. This country’s currency has weakened 4 days in a row.
Meanwhile, the price of the majority of State Securities (SBN) closed weak except for short -term SBNs of 1 year and 3 years. Yield 1 -year -old SBN dropped 1.9 basis points (bp) to 3.5% while 3 -year -old SBN dropped 6.3 bp to 4.494%.
Otherwise, yield The 10 -year tenor SBN, which is the market reference, rose 1.6 bp to 6.476%. Yield in the opposite direction from the price until the rise yield indicates a weakening bond price, and vice versa. The unit of measurement of a basis point is equal to 1/100 of 1%.
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