US Inflation Almost 7%, How Is JCI Today?

Jakarta, CNBC Indonesia – The domestic financial market was observed to be mixed last week. Where the Composite Stock Price Index (JCI) and the rupiah were observed to strengthen, while the prices of state securities (SBN) or government bonds were observed to weaken.

The Composite Stock Price Index (JCI) rose 1.75% point-to-point last week. On Friday’s trading (11/10/2021), the JCI closed up 0.14% to 6,652.92.

The transaction value last week was recorded at Rp 75.4 trillion. Foreign investors are still doing net selling (net sell) of Rp 1.3 trillion last week.

But in cash and negotiated markets, foreigners are recorded as buying net (net buy) of Rp 5.4 trillion. So if it is totaled, then foreigners do net buy amounting to Rp 4.1 trillion last week.

Meanwhile, from the domestic currency market, the performance of the rupiah against the United States (US) dollar last week was also quite positive. Even though it is still in the range of Rp. 14,300.

According to data Refinitiv, the rupiah strengthened 0.17% to the position of Rp 14,370/US$ point-to-point last week. In the previous week, the rupiah recorded a negative performance, aka weakened against the US dollar.

However, at the end of last week’s trading, the rupiah was recorded to have weakened by 0.14% against the market leader greenback (US dollar).

In the SBN market, the price of the majority of Indonesian government bonds weakened or experienced an increase in yield (yield) throughout last week. Refer to data Refinitiv, only 1, 10, and 30-year SBN experienced price appreciation and decline yield-nya.

Yield One-year SBN fell significantly by 12.1 basis points (bp) to a level of 3.247%. Whereas yield SBN fell over a 30 -year period down 2.7 bp to a level of 6.804%.

While for yield The 10 -year SBN, which is the country’s benchmark bond, weakened 8.5 bp to a level of 6.308% over the past week.

Yield in the opposite direction of the price, so that it rises yield shows bond prices are weakening, and vice versa. The unit of measurement of a basis point is 1/100th of 1%.

One of the reasons for the improvement in global financial markets was the positive sentiment from the initial research results from vaccine manufacturers Pfizer/BioNTech which stated that the third dose of their joint vaccine appeared to be able to provide strong protection against the Omicron variant of the coronavirus (Covid-19). While the initial two doses of the vaccine may not be enough to prevent infection.

Previously, Pfizer’s CEO also mentioned that while Omicron appears to be more contagious, it causes less severe disease, such as the Delta variant. Although he reiterated that more work needs to be done to know for sure.

Furthermore, the positive performance of the JCI and the rupiah last week was also driven by the government’s policy of canceling the implementation of Level 3 Community Activity Restrictions (PPKM) during the Christmas and New Year (nataru) holidays in all regions. In addition, the government is also able to reduce the number of confirmed cases and daily Covid-19 deaths.

Last week, Bank Indonesia (BI) also announced that the Consumer Confidence Index (IKK) for November 2021 rose to 118.5 from the previous month’s 113.4.

Specifically for the domestic stock market, throughout December, the domestic stock market actually tended to be positive, as it was also supported by activity window dressing what investment managers might do to beautify their portfolios.

If you look at the seasonal factors in December, one of which is driven by activity window dressing, then there is a tendency that the JCI recorded a very minimal correction.

In the last 10 years, in December, the JCI’s monthly performance was consistently positive with an average yield of 3.23%. Usually the increase in the JCI will also continue into the beginning of the following year and this phenomenon is named January Effect.

Targeted stocks window dressing December is stock blue chip which has a large market capitalization value so that its weight on the index is also large.

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