Daily Commentary (9-Nov): INDOGB rally paused on Friday as foreign posted the first net outflow in the last two weeks. According to PLTE data, foreign reported net sell of Rp373bn – mostly coming from non-benchmark series; as for benchmark series, foreign still reported net buy of Rp879bn.

Trading volume was slowing at the end of the week, reported only at Rp11.3tn. The 5yr FR63 was traded at 91.5 (-0.3%), yielding 7.91% (+6.7 bps); the 10yr FR64 at 87.2 (-0.6%), yielding 8.09% (+8.5 bps); the 15yr FR65 at 85.6 (-0.5%), yielding 8.36% (+5.3 bps); and the 20yr FR75 flat at 90.4, yielding 8.52% (+12.4bps).

JCI also fell 1.7% to 5,874.2 (+0.7% mtd or -7.6% ytd), as foreign investors reported a slight net outflow of Rp42.9bn (inflow of Rp6.1tn mtd and outflow of Rp48.5tn ytd). Rupiah also depreciated by 1% to Rp14,678/USD (still appreciated 3.5% mtd or depreciated 8.2% ytd).

However, on weekly basis, the 10yr government bond yields continued to fall by 20 bps to 8.09% and rupiah appreciated by 1.85% against USD. We estimate foreign investors will continue to report net buy of Rp10.4tn. This is the second week of gain for INDOGB, as last week the10yr government bond yield fell 34.7 bps to 8.29% and rupiah appreciated 1.7% against USD as foreign investors posted net buy into the bond market at Rp9tn.

The only economic data released was the 3Q18 CAD, which reported having widened to –USD 8.8bn (-3.35% of GDP) from –USD 8.0bn (-3.04% of GDP) in the 2Q18 or slightly lower than market consensus expectation. The widening was due to the deteriorating goods balance, which was followed by an unchanged primary income deficit. Meanwhile, financial account surplus went down to USD 4.2bn (vs. USD 4.5bn in 2Q18) on the back of foreign net portfolio outflows, whereas YoY net FDI contracted by -47% YoY in 3Q18 from -38% in the previous quarter. All in all, 3Q18 BoP deficit marginally enlarged to –USD 4.4bn from –US D4.3bn in the corresponding period. Our economist sees improving current account deficit entering YE18 due to lower oil imports followed by likely lower capital goods import. (Source: Mandiri Sekuritas)

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