Today’s Outlook:

• US stock markets were closed for the Labor Day holiday, but that didn’t stop market sentiment coming in from Asian & European exchanges. EUROZONE PMI remained in contractionary territory at 45.8 in August, although this figure was slightly better than forecast but the manufacturing sector was noticeably depressed by continued weak activity in Germany & France, according to a report by Hamburg Commercial Bank and S&P Global. In contrast in the UK, the Manufacturing PMI there increased to a 26-month high, at 52.5 in August signaling healthy expansion. Meanwhile, Asia Pacific markets digested stronger manufacturing activity data from CHINA & JAPAN. The Caixin Manufacturing PMI finally successfully crossed back into expansionary territory at 50.4 in August (from 49.8 the previous month), while the au JIbun Bank Japan Manufacturing PMI climbed for the third consecutive month, possibly crossing over to an expansionary 50 from 49.8 this August. This morning it’s SOUTH KOREA’s turn to take the spotlight with their CPI (Aug) data which seems to be in line with expectations of 2.0% yoy. Later in the evening, it is the US that will reveal a number of Manufacturing PMI data where predictions place the sector’s activity will still be in contraction territory but at a lower pace. Overall market sentiment is also still around the US PCE PRICE INDEX report last Friday which rose 0.2% mom and 2.5% yoy as expected by economists and will greatly influence the Fed’s interest rate movement at the FOMC Meeting on Sept 17-18.

• CURRENCY: The US DOLLAR experienced a slight decline but remained near its highest level in almost 2 weeks, with investors’ attention turning to the US labor report throughout this week. The most anticipated report, Nonfarm Payroll, due to be released on Friday, is considered to play an important role in shaping the Federal Reserve’s monetary policy, especially after Fed Chair Jerome Powell signaled a shift from focusing on inflation to preventing job losses. Morgan Stanley economists put forward the current thinking: stronger-than-expected Payroll numbers and a lower Unemployment Rate will likely give markets greater confidence that recession risks have abated, paving the way for equity market valuations to remain elevated and potentially allowing laggard stocks to catch up with their performance.

• COMMODITIES: World crude oil prices recorded another decline at the close of trading on Monday (02/09/24) local time, as traders became increasingly concerned about the planned increase in oil production by OPEC + scheduled to start next October, at a time when global demand, especially from the world’s two largest consumers, China & the US, still looks sluggish. US WTI prices for Oct delivery fell 0.7% to USD 73.05/barrel on the New York Mercantile Exchange. Meanwhile, BRENT prices for Nov delivery slipped 0.7% to USD 76.37/barrel on the London ICE Futures Exchange. The decline continues last week’s negative trend, where Brent fell 0.3% and US WTI plunged 1.7%. The eight OPEC+ members are scheduled to increase production by 180k bpd starting Oct (until 2025), as part of a plan to reduce voluntary cuts of 2.2m bpd, previously implemented during the pandemic. Another report late last week showed that manufacturing activity in China fell to a 6- month low on Aug, while factory product prices plummeted and factory owners struggled to secure orders; prompting policymakers to brainstorm stimulus measures that are more targeted at household spending. Meanwhile in the US, oil consumption in June fell to the lowest level for summer since the COVID 19 pandemic in 2020, according to data from the US Energy Information Administration; even though summer is a time when there are usually many road trips / traveling activities by land.

• INDONESIA: domestically, the emergence of the Nikkei Manufacturing PMI (Aug) report which dropped again this time to 48.9 (the lowest level since Oct 2021) raised market concerns on Indonesia’s fundamentals, but this did not prevent the JCI from recording a new record close at 7694.53 after touching its most recent all-time high at 7726.19, supported by Foreign Net Buy which is increasingly comfortable in the range of IDR 1 trillion each day. Supporting sentiment was more or less represented by Inflation figures (Aug) at 2.12 yoy as expected, cooling 0.01% from July, even recorded deflation of 0.03% on a monthly basis; but on the other hand Core Inflation crept up to 2.02% yoy. Will today’s market movement bring foreign spending above IDR 550bn to make their net buy positive again for the year? NHKSI RESEARCH is mindful of Rupiah position which started to drop to 15525/USD; in order to maintain JCI trajectory towards TARGET (year end) in bullish scenario to 7800 it is important to maintain positive sentiment in domestic market, especially from sector rotation which is still exist.

Company News

• APLN: APLN Recorded Marketing Sales Up 40 Percent in July 2024
• ASRI: Alam Sutera’s Steps in Realizing IDR 179 Billion Capital Expenditure
• BRIS: Up 20.28%, BSI (BRIS) Profit IDR 3.39 Trillion in I/2024 Semester

Domestic & Global News
Erick Thohir’s Strategy to Meet IDR 90 Trillion SOE Dividend Target in 2025
Volkswagen Considers Historic German Plant Closures in Cost Drive

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