Foreign Inflows Continued, INDOGB to Rally Further

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Daily Commentary (7-Nov): According to PLTE data on Wednesday, foreign has kept posting net buy of INDOGB by Rp2tn, – mostly equal between benchmark and non-benchmark series. As a result, the 5yr FR63 was traded at 91.7 (+0.4%), yielding 7.85% (-10.9 bps); the 10yr FR64 at 87.3 (+0.6%), yielding 8.06% (-8.5 bps); the 15yr FR65 at 85.4 (+1.1%), yielding 8.39% (-7.2 bps); and the 20yr FR75 at 91.3 (+2.4%), yielding 8.4% (-24.9 bps). The bond rally also had solid trading volume, reported at Rp28.4tn.

JCI was also up slightly by 0.3% to 5,939.9 (+1.9% mtd or -6.5% ytd) with foreign investors still posting net inflow of Rp738tn (inflow of Rp5.1tn mtd but still outflow of Rp49.5tn ytd). Rupiah also continued to appreciate significantly by 1.5% to Rp14,590/USD (appreciated 4% mtd but still depreciated 7.5% ytd).

The only domestic economic data that was released was the October FX reserve, which rose to USD 115.2bn (vs. USD 114.8bn in September). This is the first time the FX reserve has increased this year. According to BI, the rise was supported by oil and gas export earnings and withdrawal of govt’s offshore borrowings. The reserves are equal to 6.4mo of import or 6.2mo of import and payment of govt’s offshore borrowings.

On the global market, US Stock rallied, DXY fell, and UST yield was flat following the outcome of Tuesday’s US midterm elections as the Democrats’ renewed control of the House, which might make it harder for Trump to pursue a broad-based protectionist agenda. Dow Jones increased 2.13% to 26,180 and S&P 500 was up 2.12% to 2,814. The 10yr UST yield was unchanged at 3.21%. (Source: Mandiri Sekuritas)

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