Jakarta, CNBC Indonesia – The movement of the Composite Stock Price Index (JCI) this week is quite positive, where the JCI managed to set a new record high which was previously printed by the JCI in February 2018.
So far this week, the national benchmark stock exchange index jumped 1.05% on an annual basis point-to-point. However, on Friday (12/11/2021) trading yesterday, the strengthening of the JCI began to end, where the JCI weakened 0.6% to a level of 6,651.05.
Even though in yesterday’s trade, which was also trading this weekend, the JCI was corrected, but this week, the JCI managed to carve a positive note, where the JCI managed to score a positive level. all time high (ATH), which was at the level of 6,691.34 on Thursday (11/11/2021).
During the week, the value of JCI transactions reached Rp 58.83 trillion. Foreign investors are recorded to still conduct net buying (net buy) to reach Rp 1.94 trillion in the regular market.
However, in cash and negotiated markets, foreigners recorded net sales (net sell) of Rp 2.03 trillion. So that if it is totaled, then the foreigner will record net sell amounting to Rp 91.48 billion this week.
Even though the JCI looks positive and has succeeded in scoring a new ATH, market sentiment this week is more likely to be negative, where inflation data from China and the United States (US) which were released on the same day, Wednesday (10/11/2021), made players global markets are worried and tend to sell their shares.
Earlier on Wednesday evening Indonesia time, the US consumer price index (CPI) was reported to have shot up 6.2% on an annual basis (year-on-year/yoy), or hotter than economists estimated in a Dow Jones poll of 5.9%.
This figure is also the highest since 1990. On a monthly basis (month-on-month/mom), the CPI jumped 0.9% or above the estimate of 0.6%.
“Today’s CPI data contributed greatly to the stock market’s weakness, and to some extent, the equity market will shut down the bond market, which has been the case for most of the year,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. CNBC International Thursday (11/11/2021).
Earlier on Tuesday (9/11/2021) evening Indonesian time, the producer price index (producer price index/PPI) is reported to be up 0.6% on a monthly basis, or as expected by economists in a Dow Jones poll. However, the wholesale price index as of October rose 8.6% year-on-year, a record high in 11 years.
“The bad inflation story is still looming and needs to be addressed. We expect investors to see inflation slowing down in the months after the Fed [Federal Reserve] maintain an accommodative policy,” Brent Schutte, investment director at Northwestern Mutual Wealth Management Company, told CNBC International.
Rising US CPI and PPI make yields (yield) US government bonds (Treasury) jumped by about 12 basis points (bp) to a level of 1.5% in trading Wednesday US time, from the previous level of 1.4%.
An increase in yields indicates a price correction due to investor selling. High inflation eats away at the profits from coupon bonds.
When yield Treasuries soared, investors tended to sell stocks, especially technology stocks that were rising. They are also looking for other alternative investments that are considered as hedge assets (hedging), such as gold and bitcoin.
Apart from the US, the market is also worried about the latest inflation in China, where last Wednesday, inflation for the October period from the consumer sector (CPI) and producer sector (PPI) was released and showed a significant increase.
The Chinese government reported CPI rose 1.5% YoY (yoy) in October, higher than the previous month’s 0.7% yoy and compared to poll results. Reuters against economists who predicted 1.4% yoy.
Meanwhile, China’s PPI also skyrocketed 13.5% yoy, higher than 10.7% yoy in the previous month. The PPI in October was the highest in more than 26 years.
When inflation in producers is high, there is a risk that the CPI will also accelerate in the next few months. This is because producers are likely to increase the selling price of their products.
Investors are also worried about the risk of stagflation in the Panda country. Stagflation is an economic phenomenon in which prices rise (high inflation), but business activity stagnates, leading to high unemployment and reduced purchasing power of consumers.
CNBC INDONESIA RESEARCH TEAM
(chd / chd)
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