Today’s Outlook:
EARNINGS SENTIMENT: Warren Buffett’s Berkshire Hathaway B rose 1% after reporting quarterly results at the weekend that reported a 40% jump in Q1 operating profit from a year earlier. Super Micro Computer Inc and Micron Technology Inc rose more than 6% and 4% respectively, helping to lift the overall semiconductor sector.
ASIA & EUROPE MARKETS: CHINA released their Caixin Services PMI in-line with expectations at 52.5 in April, still holding in expansionary territory; similarly the Composite PMI and Services PMI for GERMANY & EUROZONE. The Eurozone also reported Inflation rates in their producer sector which remained in deflationary territory at -7.8% yoy in March, the pace of price declines slowing slightly from -8.5% in the previous month. As for today, market participants will keep an eye on the Service sector PMI report in Japan, housing prices in the UK, Factory Orders (Mar.) in Germany, and a number of Construction PMI (Apr.) in the European region; as well as Retail Sales (Mar.) in the Eurozone.
INDONESIA: GDP grew by 5.11% yoy in the first quarter of 2024 supported by public & government spending. This was higher than the market forecast of 5.0% and after an increase of 5.04% in the fourth quarter of 2023. This was the fastest economic growth since the second quarter of 2023. While on a quarterly basis GDP shrank by 0.83% qoq, compared to the market forecast of 0.89% decline and after 0.45% growth in the previous quarter, was the first quarterly contraction in four quarters. The good news above closed the JCI in positive territory, although it only slightly strengthened 1.17 points to 7135.89 still followed by a significant foreign net sell of IDR 1.18 trillion. The Rupiah exchange rate strengthened 69 points to IDR 16025/USD.
Corporate News
Sukuk Paid Off, Pefindo Raises Wijaya Karya (WIKA) Rating to idBBB-. Pemeringkat Efek Indonesia (Pefindo) raised Wijaya Karya’s (WIKA) rating to idBBB- from idSD. The latest rating is presented with a stable outlook. The rating action reflects the success of the company’s corporate actions. Yes, the company has paid off the full principal payment of Sukuk Mudharabah I Phase I Series A amounting to IDR184 billion on April 29, 2024. Where, previously the sukuk had failed to be paid on December 18, 2023. In addition, the rating action also reflects the State Capital Injection (PMN) from the government received on April 22, 2024. The government’s action indicates the government’s strong support for the company when it is experiencing financial difficulties. At the same time, Pefindo also upgraded WIKA’s Sustainable Bonds (SR) I, II, III to idBBB- from idCCC and SR Sukuk Mudharabah I, II, III to dBBB-(sy) from idCCC(sy). (Emiten News)
Domestic Issue
SBSN Auction Results Monday (6/5/2024), Government Receives IDR 7.02 Trillion. The Directorate General of Financing and Risk Management of the Ministry of Finance (DJPPR Kemenkeu) has conducted an auction of State Sharia Securities (SBSN) on Monday (6/5/2024). The nominal won amounted to IDR 7.02 trillion to meet part of the financing target in the 2024 State Budget. Meanwhile, the SBSN auctioned yesterday were 7 series consisting of 2 State Treasury Securities-Syariah (SPN-S) and 5 Project Based Sukuk (PBS). Meanwhile, the total incoming bid amounted to IDR 15.99 trillion. In detail, the SPN-S series auctioned are SPNS18112024 and SPNS02022025 with a discount coupon rate and maturity on November 18, 2024 and February 2, 2025 respectively. The SPN-S series has a non-competitive purchase allocation of a maximum of 75% of all auctions won. Meanwhile, the Project Based Sukuk series to be auctioned is offered in 5 series, namely PBS032, PBS030, PBS004, PBS038 and PBSG001. The tenor of the Project Based Sukuk offered also varies from 2 years to 25 years, and coupon rates ranging from 4.87% to 6.87%. The PBS series has a non-competitive purchase allocation at a maximum of 30% of the entire auction won. (Bisnis)
Recommendation
US10YT has been predicted yesterday to head towards the Support lower channel around yield 4.40%; but even if that happens it has not broken the uptrend that occurred since the beginning of the year. ADVISE: BUY ON WEAKNESS. Resistance: intersection of MA10 & MA20 around yield 4.60%.
ID10YT hit the MA20 Support at yesterday’s low, or at a yield of 6.958%; as well as having reached the 50% Fibonacci retracement (the most common retracement be it up/down). ADVISE: watch for technical rebound. Nearest resistance: MA10 / yield 7.118%; if unable to break above that level then ID10YT may have a little trouble maintaining this upward swing.
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