Investors Had to Use Other Sentiments to Determining The Direction of Market Movement

Today’s Outlook:
Amidst the national holiday in the US stock market, investors had to use other sentiments available in determining the direction of market movement. With the first visit to China by a US secretary of state in five years. The discussions would likely to have included grievances over trade, the state of the global semiconductor industry as well as the status of self-governed Taiwan and Beijing’s human rights record; the constructive talks aimed at smoothing the many differences between the two global  economic superpowers. Goldman Sachs joined the growing band of major banks such as Bank of America, JPMorgan, UBS, & Standard Chartered who cut China’s economic growth in this post-pandemic recovery period, to 5.4-6% for this year, and also lowered China’s 2024 GDP prediction to 4.5-4.6%. European and Asian stock markets ended in negative territory yesteday, as investors digested the global economic outlook that increasingly shows an economic slowdown, where the Euro Zone entered a recession in the first quarter of this year and China has not been able to take control of regional market growth. Additionally, the Federal Reserve has indicated that further rate hikes could be coming in the summer months as it tries to stamp down on inflation, potentially sending the world’s largest economy into  recession. On the other hand, today will be watched by the Chinese central bank which is expected to cut the benchmark interest rate by at least 10 bps in an effort to stimulate their economic growth. In contrast, the Bank of England is expected to raise its benchmark interest rate by 25 bps on Thursday to combat the highest Inflation rate among G7 countries, still 4x greater than their 2% target. World oil prices slipped on Monday 19/06/23 triggered by a weak economic revival in China that will hit the demand side of the world’s largest oil importer in the second half of this year. Meanwhile, the US Dollar index was little changed against other major world currencies at 102.33, after falling 1.2% in the previous week (the biggest drop in five months); leaving Gold prices unmoved at USD 1,954.39 / ounce. The yen weakened on Friday’s dovish Bank of Japan meeting results, touching a 7-month low of JPY 141.97/USD; while a hawkish European Central Bank, which just raised rates by 25bps last week, helped the Euro to hang near a 5-week peak at USD 1.092. In the bond market, the 10-Year US Treasury rate is at a yield of 3.822%.

Corporate News
Medco Energi (MEDC) Plans to Issue IDR 1 Trillion Bonds Medco Energi (MEDC) will issue IDR trillion bonds. The sustainable bonds V phase I in 2023 will address the market in three variants. Including Series A with a 3-year term, Series B with a 5-year term, and Series C with a 7-year term. All proceeds from the bonds, after deducting issuance costs to provide loans to Medco Platinum Road Pte.Ltd, a subsidiary of the company, to purchase USD bonds from bondholders through the secondary market issued by Medco Platinum Road Pte. Ltd for the purpose of partial repayment. (Emiten News)

Domestic Issue
Bonds Considered Promising Rather than IPO, Leasing Should Pay Attention to Interest Rates Leasing companies are busy issuing bonds or debt securities for capital increase. This step is said to be more promising than funding through banks and Initial Public Offering (IPO) or stock issuance. “Funding through IPO or stock issuance is now less attractive, because the JCI [Composite Stock Price Index] corrected 5%. So it means that it is less attractive to enter the capital market or increase the number of securities there,” said Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira. Bhima added that the issuance of bonds is more rational even though the challenges ahead are higher interest rates. This is seen from the costs incurred by companies to use money from loan sources to the risk of absorption of financing. According to him, the trend of bond issuance is also increasing because banks need to dispose of excess funding by offering quite attractive interest. On the other hand, according to Bhima, multifinance companies have greater needs. This is because after the pandemic, the business began to move again for the lending sector in various business fields, from multipurpose loans to motor vehicle loans. The trend is experiencing a recovery so that multifinance requires much larger capital. (Bisnis)

Recommendation
US10YT tests mid-term Trendline Resistance which prevents yield from continuing its short-term Uptrend. ADVISE: Wait & See; Average Up if able to break 3.85 3.86% level. ID10YT is attempting to break MA10 Resistance as well as MA20; a strengthening that has not happened since last March. ADVISE: Hold for confirmation; get ready to Average Up. TARGET: MA50 / 6.487%.

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