The volatility of energy commodities amid the easing of China’s Zero-Covid Policy. Oil prices are approaching its lowest level this year, as US fuel supplies are above forecast, causing Brent and WTI oil to come near to the Lowest Level of USD73.7/Barrel and USD70.6/Barrel of YtD, respectively. Continued pressure on oil prices is also in line with the global economic growth projected to weaken. In contrast to Newcastle’s ICE price, which rose again to break the psychological level of USD400/Ton, influenced by rising European gas prices. On the other hand, besides the increase in Indonesia’s Foreign Exchange Reserves (Cadev), the positive catalyst for consumer optimism is relatively holding JCI to go down further. Consumer Confidence Index Indonesia in Nov. was at the level of 119.1 (vs. Oct. 120.3), or still stayed in the optimistic area (>100). Additionally, Indonesia’s Cadev in Nov. is worth USD134 billion (vs. Oct. USD130.2 billion). The Cadev gain is supported by Foreign Inflow within the Government Securities (SBN) market, attractive yields of Government Bonds (SUN) for FR91 and FR87, as well as low supply along with the SBN Auction 2022 that ended on 6 December.
Corporate Bonds
Subsidiary of Indika Energy Buyback Debt IDR 464.6 B. The subsidiary company PT Indika Energy Tbk (INDY) made a buyback (buyback) of debt securities or bonds worth a total of US$ 41.44 million or Rp.464.6 billion. Indika Energy Capital III Pte Ltd and Indika Energy Capital IV Pte Ltd did this. Indika Energy Capital III Pte Ltd has purchased 5.875% of the notes maturing in 2024, with an aggregate principal amount of US$ 10.5 million on the open market. The 2024 notes that were bought back represented around 1.83% of the initial principal value of the 2024 notes. (Beritasatu.com)
Domestic Issue
Retail Sales Growth Slows. Retail sales growth in November 2022 has slowed down compared to October 2022. The Retail Sales Survey showed that the November 2022 Real Sales Index grew 0.7% MoM. Lower than the growth in October 2022 of 2.3% MoM. This is in line with the Consumer Confidence Index in November 2022, which was recorded at 119.1, a decrease from 120.3 in October 2022.
Recommendation
Investors are balancing the Headwinds and Tailwinds ahead of some economic data release in the remainder of 2022 trading or the end of 4Q22. This week, from the external side, investors are looking forward to the US Headline CPI data in Nov., which is projected to decline again, or to 0.3% MoM and 7.3% YoY and also, the FOMC Rate Decision, which is projected to raise the Dec. FFR only +50 Bps creating a Lower Bound of 4.25%. As for the domestic side, investors are looking forward to the Nov. Trade Balance data, which is projected to experience a surplus of +USD4.05 billion (vs. Oct. +USD5.67 billion) or shrink on a monthly basis. This shrink is in line with the normalization of a number of major commodities prices and export pressures due to the declining demand in Indonesia’s several main trading partners. Additionally, Rupiah depreciation is suppressing Indonesia’s bargaining power; imports in Nov. are projected to grow only 10.1% YoY (vs. Oct. 17.4% YoY).
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