SUN Market movement in a week, amidst the BoE and ECB continued their upward trend in interest rates, which rose by 50 Bps to 3.50% and 2.50%, respectively. The positive catalysts are the surplus of Indonesia’s Trade Balance in Nov. maintained at +USD5.16 billion and US economic data, such as flattening Headline Inflation and the Dec. FFR rise in line with market expectations.

Corporate Bonds
PGAS Bonds Buyback USD 400 Million. PT Perusahaan Gas Negara Tbk (PGAS) has completed an early tender offer of USD 400 million or IDR 6.24 trillion (exchange rate IDR 15,600) on 12 December. PGAS accepts tender submissions from bondholders that exceed the maximum request limit (oversubscribe). Furthermore, the purpose of this tender offer is to buy back USD 400 million of PGAS bonds from USD 1.35 billion (5.125%), as part of the PGAS initiative in the company’s Liability Management activities. (DetikFinance)

Domestic Issue
Fitch Cuts Their Projection on Indonesia’s Economic Growth. Fitch Rating cut its forecast for Indonesia’s economic growth next year from 5.8% YoY to 4.8% YoY. The projection is based on the weakening in several economic indicators, including the weakening demand of both domestic and global markets, the surge in inflation, which made Bank Indonesia lower the benchmark interest rate., and the surge in commodity prices, which are predicted not to continue next year. (Kontan)

The Window Dressing deadline happens near the January Effect. NHKSI Research sees potential for BI to loosen the monetary policy or the Dec. BI 7DRR that projected to only increase by +25 Bps, which will be the positive catalysts driving the JCI for the next two weeks, or in the rest of 2022 trading. This moderate increase in BI 7DRR benefits the Technology sector, which has a high sensitivity to rising interest rates. On the other hand, BI 7DRR in Dec., projected to increase to 5.50% or has grown by 200Bps YTD, will keep the Banking margins high. Furthermore, a significant appreciation potential in Technology Sector stocks and banking, especially Core Capital-Based Bank Groups IV (KBMI IV), will encourage the strengthening of JCI as a whole (Window Dressing). Additionally, the absence of the FOMC Meeting in Jan. 2023 caused this period’s JCI to have the opportunity to form its own movement pattern (January Effect). Thus, investors continue to anticipate any potential in BI’s further aggressive Hawkish as the Indonesian Headline Inflation survey in the third week of Dec. has reached 0.4% MoM. This survey result has not included an inflation spike potential caused by the New Year holiday.

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