SUN Benchmark Mixed Amid US Recession. In addition to Indonesia’s inflation which has not become a concern in the near future, the movement of the SUN market for the week amid the US economy officially recorded a recession, or GDP Annualized 2Q22 contracted -0.9% QoQ (Vs. 1Q22 -1.6% QoQ), in line with consumer spending, with Personal Consumption 2Q22 QoQ +1.0% and Core PCE 2Q22 QoQ +4.4%, slower than the previous quarter. This recession has the opportunity to push the Fed’s policy to be more relaxed in 2H22 and even lead to Dovish in 2023. The past week, the JCI rose almost 1% with Industrial and Energy leading sectoral gains, rising 7.7% each.
Corporate Bonds
WSKT: Records Loss in 1H22. PT Waskita Karya (Persero) Tbk (WSKT) posted a revenue of IDR6.09 trillion or an increase of 29.29% YoY in 1H22. From the bottom line, WSKT posted a loss attributable to owners of the parent company of IDR236.51 billion, a reversal from the IDR154.13 billion net profit achieved by WSKT in 1H21. (Kontan)
Domestic Issue
Indonesia’s Exports Threatened to Fall Due to US Recession. The Minister of Finance is worried that the US economic recession will push Indonesia’s exports down. The US economy was recorded at minus 1.4% in 1Q22, and contracted again to 0.9% in 2Q22. BPS data shows that the US has become the second and third largest destination for nonoil and gas exports in the last three months. It was recorded that Indonesia’s exports to the US amounted to USD2.46 billion in April 2022. The US became the second largest non-oil and gas export destination for that month. (CNN Indonesia)
Recommendation
BI Dovish, Maintaining 5% GDP Growth. This week, Indonesia’s 2Q22 GDP is projected to grow +5.20% YoY (Vs. 1Q22 5.01% YoY), as more relaxed mobility boosts consumption and production levels during Ramadan and Eid. NHKSI Research sees that the economy is facing the challenge of rising inflation, as the July CPI Headline is projected at 4.82% YoY (Vs. June 4.35% YoY). This projection once again exceeds the upper limit of BI’s annual target of 4.5%-4.6%. Inflation in July was influenced by the adjustment of the selling price of processed food, due to the increase in the cost of importing raw materials; and adjustment of TDL and Non Subsidized LPG. Meanwhile, July’s Core CPI is projected to be 2.87% YoY, or still within BI’s target of 2%-4%, meaning BI still has room to hold BI at 7DRRR.
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