Indonesian Market Analysis March, 27th 2023

The threat of a credit crisis, that creates damaging shockwaves across the global financial system has overtaken inflation as investors’ biggest worry in the wake of a spate of US bank collapses.

In recent days investors have focused on German giant Deutsche Bank. 
The company's shares have lost around more than a quarter of their value this month and the cost of protecting against a default on its bonds soared even though few put it in a class with Credit Suisse. 

For now,  few investors see this year's events as a repeat of the systemic crisis,  that swept through markets in 2008 taking down Lehman Brothers and prompting government bailouts of large financial institutions. 

But fundamentally, the index was affected by the 45 most liquid stocks' performance throughout 2022. 

In the latest news, Aneka Tambang reported an increase in performance throughout 2022. This state-owned metal mining issuer posted a net profit of 3.82 trillion rupiahs in 2022. 

This had shot up 105% from the realized net profit in the final period of 2021, which was only Rp1.86 trillion. 

On the other hand, state-owned telecommunications company Telkom Indonesia saw its net profits shrink by 18.46% year on year to Rp27.6 trillion. 

Telkom said the drop in earnings was mainly due to unrealized losses, from its investment in homegrown tech giant GoTo. The fair value of the company's subsidiary investment in goto plummeted to 6.7 trillion rupiahs. 

Next, let’s move on to the rupiah and commodity prices. Rupiah was traded at 0,03%, to 15.155 a dollar. It was due to The Organisation for Economic Cooperation and Development (OECD) estimated Indonesia's economic growth this year will grow at 4.7% on an annual basis. 

And spot gold price was corrected by 0,57%. It was because investors continue to assess, the latest news from the banking sector in the US and Europe. 

Meanwhile, oil prices were up,  as investors were watching out for China’s manufacturing and services purchasing managers’ indexes to be released later this week. WTI crude oil price was up 0,77%, and brent price gained 0,69%. 

Therefore, tomorrow's index is expected in the range of 6.728-6.796. And rupiah will be in the range of 15.125-15.225. 

Next, let’s take a look at the top losers and top gainers of the day. 

Berlin Moves Towards a Cashless System

For a long time, Germany, especially The Capital Berlin was known as a place where cash was king. Where many shops, and restaurants refused to accept payments by card or mobile phone. 

However, that is rapidly changing in Berling a 22-venue food hub has opened and cash banned throughout. 

Near the city's Potsdamer Platz, there are authentic Chinese noodles, Korean fried chicken, and Syrian hummus. and the whole place is fully cashless, which is something new for the German Capital.

According to the German Central Bank, cash continues to be the most used way to pay for goods and services. 

However in 2021, 58 percent of all payments were cash down from 74 percent in 2017. 

China Says It'll Build a Strong Domestic Market

China's Newly Appointed Vice Premier, Ding Xuexiang on Sunday, 27 March said, that his country would accelerate the building of a strong domestic market and provide a large-scale market for the economy,

The Nation' Government announced plans for a consumer-led revival of the struggling economy, earlier in March with this year's growth target at around 5% following the end of anti-virus controls, which kept millions of people at home and trigged protests.

China's economic growth has struggled since mid-2021 when tighter controls on debt triggered a slump in the vast real estate industry. 

Sri Mulyani Testifies Over Potential Money Laundering at Finance Ministry

Today on Monday, 27 March, Indonesia's Minister of Finance, Sri Mulyani was summoned to a meeting with the Indonesia House of Representatives Commission XI, to give her clarifications over suspicions of money laundering surrounding the Finance Ministry, potentially worth Rp349 trillion. 

Those Suspicious transactions were filed in 300 reports from Indonesian Financial Transactions Analysis Centre (PPATK).

Minister Sri Mulyani explained that following those reports, 82 audit investigations were done by the Ministry of Finance. 193 finance ministry employees were then handed disciplinary actions. 

According to the Minister, only Rp22 trillion had involved Ministry of Finance Employees. 

Amid Banking Crisis, Will The Fed Soften Stance on Rate Hikes?

So despite a banking crisis, The Fed still choose to hike their rates by 25 basis points. 

To discuss the implications of The Fed's latest rate hike, we are joined by Josua Pardede, who is the Chief Economist of Permata Bank.

Singapore Core Inflation Remains at 5.5%

Singapore's key consumer price gauge rose 5.5% in February, unchanged from January and lower than forecast, official data showed on Thursday (23/3/2023), though while analysts said core inflation appeared to have peaked, prices remained at historic highs.

The monetary authority of Singapore (mas) said in a statement, that lower prices for services were broadly offset in the core inflation data by higher prices for retail, as well as other goods and utilities.

However, the inflation rate in february is still at the same level as in January, which was the fastest pace seen since November 2008.

M-a-s has said, core inflation was likely to stay at about 5%, for the early part of 2023.

It has also projected a core inflation rate of between 3.5% to 4.5% in 2023, with headline inflation coming in at between 5.5% and 6.5%.

The Fed Hikes Interest Rates By 25 Bps

The federal open market committee of the US. The federal reserve, announced on Wednesday (22/3/2023), that it would raise its federal fund's rate by 25 basis points to between 4 points 7-5 and 5%, the highest level since October 2007.

It also marks the ninth consecutive rate increase since March 2022.

At a news conference on Wednesday, federal reserve chair Jerome Powell said that the process of getting inflation back down to 2%, has a long way to go and is likely to be bumpy.

Despite market hopes amid a banking crisis. The central bank leader also said that rate cuts are not in base case for the remainder of 2023.