Government funds placement in BPD, became a sentiment earlier in the week. The placement of these funds will facilitate the distribution of Regional Development Bank (BPD) loans, in line with the implementation of the National Economic Recovery (PEN) program. Previously the government placed funds in the Association of State-Owned Banks (Himbara), namely Bank Negara Indonesia, Bank Mandiri, Bank Rakyat Indonesia, and Bank Tabungan Negara worth IDR 30 trillion. Sentiment on fund placements was positive, amid the high ownership of Government Securities (SBN) by the banking sector. As of July 24, 2020, conventional banking sector ownership was valued at IDR 962.7 trillion, representing 30.3%. This figure exceeds IDR 942.2 trillion foreign investors’ ownership or 29.6% of tradable SBN worth a total of IDR 3,180.5 trillion. This fund placement policy, in order to revive the domestic economy, and investors to enter the Indonesia financial market.

SMF Revises Loan Distribution Targets. Multi-Financial Facilities (SMF) revised the loan disbursement target of around 30% of the total 2020 RKAP worth IDR 13.04 trillion. On the other hand, SMF remained consistent in distributing long-term funds in the distribution of FLPP, amounting to 102 thousand units with the actual position being channeled at 75 thousand units. Previously, SMF had disbursed loans to KPR dealers worth IDR 4.2 trillion or 32.23% of the 2020 target during the 1H20 period. Cumulatively, the total accumulated funds channeled from the capital market to the housing finance sector from 2006 to June 30, 2020 reached IDR 66.25 trillion. In addition, SMF’s total assets as of June 2020 were valued at IDR 29.32 trillion, up 39.57% from the same period the previous year of IDR 21 trillion.

Government spending rises, avoid recession. Economic performance hampered by a pandemic has put pressure on a number of economic support sectors. To anticipate this, the government will accelerate spending to have a positive impact on the economy and avoid recession. Accelerated expenditure has a good impact on the business world and investment performance in 2H20. Previously, the government prepared an economic recovery program with a budget of IDR 607.65 trillion without including a budget for handling Covid-19 or the health sector. This budget consists of IDR 205.20 trillion demand side, and IDR 402.45 trillion supply side. Meanwhile, the demand side side is in the form of the Family Hope Program, Basic Food Cards, Jabodetabek Bansos, Non-Jabodetabek Bansos, Pre-Work, Electricity Discounts, and Village Fund BLT. Meanwhile, the supply side includes ultra-micro and MSMEs, corporations, state-owned enterprises, regional governments and government reserves.

Investors are pessimistic about the US economy, which was the basis for US dollar depreciation earlier this week. The weakening of the United States dollar (US) was also influenced by the addition of Covid-19 cases in the US, US and China trade conflicts, and the US plan to channel USD 1 trillion stimulus. Yesterday, the rupiah strengthened 0.42% to a level of IDR 14,549 / USD on the spot market. On the other hand, investors’ attitudes look closely at global economic data including the US interest rate decision on Thursday (30/07) the day after tomorrow, which is projected to hold at 0% -0.25%. The burden sharing policy has the opportunity to encourage investor interest in the 5-year FR0081 tenor. This policy stipulates that Bank Indonesia (BI) can buy 5-year to 8-year SBN through a private placement mechanism. Overall, the series auctioned was SPN 03201029 (New Issuance), SPN12210429 (Reopening), FR0081 (Reopening), FR0082 (Reopening), FR0080 (Reopening), FR0083 (Reopening), and FR0076 (Reopening).


-REVIEW (July 27, 2020)-
FR0081 (5yr): -2.0 Bps to 102.09 (5.99%)
FR0082 (10yr): -0.9 Bps to 101.16 (6.83%)
FR0080 (15yr): +0.4 Bps to 101.74 (7.30%)
FR0083 (20yr): -1.6 Bps to 101.03 (7.39%)

UST 2yr: +0.004 point to 0.15%
UST 5yr: +0.010 point to 0.28%
UST 10yr: +0.026 point to 0.61%
UST 30yr: +0.030 point to 1.26%
German Bund 10yr: -0.044 point to -0.49%
UK Gilt 10yr: -0.035 point to 0.10%

CDS 2yr: -1.51% to 48.31
CDS 5yr: -0.48% to 117.66
CDS 10yr: -1.24% to 184.40

WTI: +0.75% to USD41.60/Barrel
BRENT: +0.16% to USD43.41/Barrel
Source: Bloomberg