Today’s Outlook:
Wall Street ended in positive territory on Monday (28/08/23) as the Nasdaq led gains of 0.8%, while the overall market was buoyed by rising 3M and Goldman Sachs stocks ahead of the PCE Inflation and employment data releases this week; that will offer more clues on the Federal Reserve’s interest rate path. Markets also digested last Friday’s comments from Fed Chair Jerome Powell that the central bank may need to raise interest rates further to ensure inflation is contained. Focus now shifts to a report on the Personal Consumptio Expenditures (PCE) Price Index inflation report, the Fed’s preferred inflation gauge, to be released on Thursday; followed by Non farm Payrolls data due on Friday. Shares of Chinese companies listed on Wall Street also rallied over 2% after China halved the stamp duty on stock trading (aside from softening margin necessity) effective Monday to boost its ailing market. Earlier this morning, Japan just released its Unemployment Rate of 2.7% in July, up from 2.5% in the previous month. Market participants will monitor the first US employment data to be published today, namely JOLTs Job Openings (July) along with Consumer Confidence (Aug.) which is forecasted to fall slightly to 116 from 117 in July. Bank Indonesia launched a new financial instrument called Bank Indonesia Rupiah Securities (SRBI) which will be one of the instruments to attract fund inflows and eventually stabilize the Rupiah exchange rate which continues to be depressed due to the strengthening of the US Dollar. SRBI, which will be auctioned in mid-September 2023, is a short-term debt security of Bank Indonesia with a guarantee of SBN purchased from the government. BI is said to have more than IDR 1000 trillion in government securities. These bonds can be purchased by foreign residents and the general public.
Corporate News
Erajaya (ERAA) Issues SGD 50 Million Bonds for Expansion in Singapore and Malaysia PT Erajaya Swasembada Tbk (ERAA) through its business entity, Erajaya Digital Pte. Ltd. issued global bonds amounting to SGD 50 million for expansion purposes. Head of Legal & Corporate Secretary of Erajaya Swasembada Amelia Allen said that the bonds were listed on the Singapore Exchange Securities Trading Limited (SGX-ST) on August 24, 2023. The plan is that the funds from the bond issuance will be used to support Erajaya’s business outside Indonesia. However, he was reluctant to specify how much of the allocation for working capital and investment. The new bonds issued by Erajaya Digital Pte. Ltd. offers a coupon of 4.5% with a semi-annual coupon frequency. The coupon date will expire on August 24, 2026. (Kontan)
Domestic Issue
Selling Bonds, BI Claims Not to Rival the Government Head of the Monetary Management Department of Bank Indonesia (BI) Edi Susianto emphasized that the launch of Bank Indonesia Rupiah Securities (SRBI) as a monetary instrument is not to compete with government securities (SBN) issued by the government. In fact, BI views that its “debt securities” can be a supporter of SBN. In fact, Edi said that SRBI could fill the void when the issuance of SBN by the government experienced a downward trend. This is a support for the investment side if the strategic investment requires money market instruments. He said, this SRBI instrument also provides space for foreigners to become their alternative investment instrument. With such logic, this SRBI should provide matching that Indonesia is still considered optimistic to invest in the financial market portfolio. (Sindonews)
Recommendation
US10YT has not managed to climb back above the first Resistance, which is MA10 around 4.252% yield at the moment. US10YT is in a critical situation relying on the second Support, which is MA20 around 4.185% yield to withstand further yield decline. ADVISE: HOLD; Wait & See.
ID10YT unfortunately MA10 Support is incapable of holding the yield decline, therefore ID10YT will seek for a second Support at MA20 / yield 6.426%. Resistance : MA10 / 6.53%. ADVISE: HOLD.
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