SUN market moves mixed last weekend, amidst foreign selling in the Government Securities market. Foreign investors net sell worth IDR 4 trillion or during the period 26 June to 1 July. The movement of SUN on the weekend was also amid uncertainty in global political conditions, making investors avoid medium and long tenors. The ratification of Hong Kong’s security law by the Chinese government has the potential to increase regional tensions. On the other hand, a number of investors responded positively to the rise in Indonesia’s manufacturing index from May 28.6 to June 39.1. This improved manufacturing index is evidence that easing restrictions designed to control the Covid-19 pandemic are able to increase manufacturing industry activity.
Issuance of 100 Billion Yen Samurai Bonds. The government issues 100 billion yen in Japanese Yen (Samurai Bonds) SUN. This issuance is a strategy to finance the 2020 budget deficit of 6.34% of gross domestic product (GDP). The Ministry of Finance (MoF) issued five Samurai Bonds series, namely RIJPY0723, RIJPY0725, RIJPY0727, RIJPY0730, and RIJPY0740, and RIJPY0740 series. For the record, until June 2020 the government has issued Government Securities (SBN) worth IDR 630.5 trillion or 41.2% of the gross SBN target. In addition to Samurai Bonds, the government has also issued USD 4.3 billion Global Bonds (6 April 2020); Global Sukuk USD 2.5 billion (17 June 2020); and Retail SBN and Sukuk Wakaf until 1H20 worth IDR 14.39 trillion. (Cash)
World Bank: Infrastructure Deficit USD 1.6 Trillion. World Bank assesses that Indonesia has recorded massive development in the last 20 years. On the other hand, the gap in infrastructure and Human Resources (HR) for Indonesia to compete with other countries. The lack of investment causes an infrastructure deficit of up to USD 1.6 trillion, which will affect long-term economic growth. Therefore, the World Bank considers that Indonesia is more focused on collecting domestic income; increase the efficiency and effectiveness of public spending; and the Indonesian government needs to manage loans carefully both at the central and regional levels. (Cash)
Investors Await Economic Data Release. First, the June Consumer Confidence Index (IKK) which is projected to improve to level 84; Second, the US service sector PMI for June, which is projected to rise to the level of 46.7, indicates the US has not expanded and is still contracting; Third, Indonesia’s foreign exchange reserves in June are projected to rise to the level of USD 131.7 billion amid BI’s decision to cut the benchmark interest rate to 4.25%; Fourth, last week’s US unemployment rate is projected at 1.38 million or better than the previous week’s 1.43 million. In addition to PBS002 and PBS026, investors can start looking at PBS022 and PBS005, the series that will be offered at the Sukuk auction on Tuesday (07/07) tomorrow.