Jakarta, CNBC Indonesia – The Composite Stock Price Index (JCI) managed to record a brilliant performance this week, where this week is the first week of 2022. So what are the sentiments that will color the market over the next week?
Launching from Refinitiv so far this week, the national benchmark stock exchange index jumped 1.82% point-to-point. On Friday (7/1/2022) trading yesterday, the JCI closed up 0.72% to 6,701.32.
Even though it’s still about 0.8% away from the level all time high (ATH) which was inscribed in November 2021, but the JCI was able to end this week with a positive score, because on two trading days this week, Wednesday and Thursday, the JCI had reversed towards the red zone.
During the week, the value of JCI transactions reached Rp 66.4 trillion. Foreign investors are recorded to have taken net buying (net buy) almost Rp 3 trillion, or more precisely Rp 2.96 trillion in the regular market.
So, what are the sentiments that will drive the market over the next week?
Apart from being overshadowed by news developments regarding the spread of Covid-19, particularly the Omicron variant, and about the unrest in Kazakhstan, investors will also pay attention to a number of economic data from within the country and abroad.
Domestic Sentiment
On Monday (10/1), Bank Indonesia (BI) will release the December 2021 Consumer Survey Report.
The previous survey in November 2021 indicated that consumer optimism for economic conditions continued to strengthen. This is reflected in the November 2021 Consumer Confidence Index (IKK) of 118.5, higher than 113.4 in October 2021.
Then on Tuesday (11/1), BI will also release the Retail Sales Survey Report. Previously, retail sales for the November 2021 period were predicted to grow again. This is reflected in the November 2021 Real Sales Index (IPR) of 199.7 or an annual growth of 10.1% (yoy).
Three days later, Friday (14/1), BI will issue two data. First, the Business Activity Survey (SKDU) Quarter IV 2021 Report. Second, the Prompt Manufacturing Index (PMI-BI) Quarter IV 2021.
In the previous release, SKDU indicated that business activity in the third quarter of 2021 continued to grow positively, although it was slower than the achievement in the previous quarter. This is reflected in the Weighted Net Balance (WNB) of 7.58%, lower than 18.98% in the second quarter of 2021.
Meanwhile, the performance of the Manufacturing Industry sector in the third quarter of 2021 is indicated to decline. This is reflected in the PMI of 48.75%, lower than 51.45% in the second quarter of 2021.
The decline in PMI-BI is in line with the activities of the Manufacturing Industry sector as a result of the SKDU which contracted slightly amid the mobility restriction policy in the third quarter of 2021.
Meanwhile, in the fourth quarter of 2021, the performance of the Manufacturing Industry sector is predicted to increase and is in an expansion phase. The PMI-BI in the fourth quarter of 2021 is forecasted at 51.17%, higher than the achievement in the previous quarter.
“The majority of the sub-sectors are predicted to increase, with the highest indexes being in the Paper and Printed Goods sub-sector as well as the Cement and Non-Metal Minerals sub-sector,” explained Bank Indonesia, quoted by Antara. CNBC Indonesia, Sunday (9/1).
External Sentiment
Apart from domestic, a number of major countries will also release important economic data during next week.
Monday (10/1), there will be the release of data on the unemployment rate in the European Union (EU) November 2021 which is expected to fall to 7.2%. With this, the EU unemployment rate is forecast to continue its downward trend for the seventh straight month.
On the same day, investors will also pay attention to data on consumer expectations regarding US inflation released by the Central Bank of the United States (US) aka the Federal Reserve (The Fed) for the New York area. US consumer inflation expectations for next year edged up to a new record 6% in November 2021 from 5.7% in October. As for December, it is predicted to increase slightly by 6.1%.
The following day, Fed Chair Jerome will testify at the hearing of his nomination as chairman of the US central bank for a second term before the Senate Committee on Banking, Housing, and Urban Affairs.
Then, on Wednesday (11/1), there will be inflation rate data in China and the US. The analysis predicts China’s annual inflation rate as of December 2021 will drop to 1.8% from the previous 2.3%.
Meanwhile, the US annual inflation rate will rise to 7% in December, from the previous position of 6.8%. The annual core inflation rate will also increase to 5.4% from the previous 4.9%.
With this increase, according to records Bloomberg, The US inflation rate is probably the fastest in four decades. This in turn will support the Fed’s accelerated tapering off policy and at the same time will make consumers more anxious about economic conditions.
Then, on Thursday (12/1) there will be the release of data on claims for unemployment benefits in the US as of January 8, 2022, which is expected to increase to 210 thousand claims, from the previous 207 thousand.
Finally on Friday, there is a lot of data that investors will be watching. Starting from China’s annual export and import data as of December 2021, the United Kingdom’s trade balance, US retail sales, to US consumer sentiment published by the University of Michigan.
For the latter, the US Consumer Confidence index as of January 2022 is predicted to decline to 70, from December’s position of 70.6.
CNBC INDONESIA RESEARCH TEAM
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