External trade review

Transcription

1 External trade review Deficit still haunting Exports and imports Sep 2018 Oct 2018 Est. Cons. Exports (USDbn) Imports (USDbn) Exports (%, YoY) Imports (%, YoY) Trade balance (USDmn) Accumulated trade balance Source : Statistics Office (BPS) OG and Non OG import Source : Bloomberg High October trade deficit worsens 4Q18 CAD outlook Worse than both our estimates and consensus, October trade balance posted USD -1.8 bn deficit after it enjoyed surplus of USD 0.31 bn in September. It continued trend in previous quarters when trade surplus always occurred at the end of quarter (March, June and September) but it was then followed by significant deficit. October trade deficit brought YTD trade balance to USD 5.5 bn. Import jumped again, showing government s import control policy still not effective yet The import data surprised us as it posted significantly higher-than-expected growth at 23.7% YoY (20.6% MoM) to USD 17.6 bn in October. Oil and gas import grew 31.8% YoY (26.9% MoM) to USD 2.9 bn as the oil price still gained traction in October while non oil and gas import grew 22.17% YoY to USD 14.7 bn. Although the import value increased significantly, the volume only gained 7.9% YoY (23.47% MoM). It was even lower than export volume growth at 10.5% YoY. Based on economic groups, capital goods import drove the total growth as it posted 28.6% YoY growth in October, followed by raw/intermediary goods at 23.1% YoY and consumption goods at 20.0% YoY. The significant growth in October showed that the effectiveness of government and central bank policies mix to curb import still cannot be verified by September surplus. Moreover, we see that this deficit repeat the unique trend in 2018 when lower import growth (that followed by trade surplus) always occurred at end of quarter (March, June and September) and it will be followed by more significant import growth in following month. October import figure brought YTD import figure to USD bn or 23.4% higher than same period in previous year. Lower commodity prices lower export growth Indonesia export lost its growth power in October due to lower price of its main commodities export. According to BPS, export only increased by 3.6% YoY (5.87% MoM) to USD15.8 bn, continued its single digit growth since August. Oil and gas experienced negative annual growth of -0.44% YoY (15.2 % MoM) while non oil and gas sector had 4.03% YoY growth in October. Indonesia s main commodities for export had downtrend in October as coal price growth weakened to 14.4% YoY (Sept: 16.9% YoY) and CPO price weakened -24.9% YoY (Sept: -20.9% YoY). Currently, Indonesia is not having export goods that have potential upside like commodities in their boom era. That is why when mining sector experienced negative growth of -1.6% YoY in October, the overall export growth also slowed down. We view stagnant export growth will remain until 2019 if there is not structural change domestically or significant change in commodities trend worldwide. This will be the ultimate challenge for government going forward to increase export based on manufacture sector and reducing CAD. However, the export volume growth remained robust at 10.5% YoY (11.5% MoM). October export figure brought export value YTD at USD bn, 8.8% higher than same period in CAD will be at 2.8% of GDP in FY 2018 and inch down to 2.5% in The significant high of trade deficit in October gave current account a bad start to begin 4Q18. However, we predict 4Q18 CAD will be lower than 3Q18 figure at 3.37% of GDP. It even lower enough to bring CAD in FY 2018 only at 2.8% of GDP. Usually, there is lower deficit seasonally in primary income part of current account as the peak of dividend and interest payment in Indonesia to foreign countries is in 2 nd quarter and 3 rd quarter. Meanwhile, we see the deficit in service trade will also be lower in 4Q18 as Lombok tourism sector starts to recover. In 2019, we expect the CAD will even be lower at 2.5% of GDP due to Rupiah depreciation, lower GDP growth and government and central bank policy mix effect. Imanuel Reinaldo ext. 820 reinaldoimanuel@ciptadana.com Please see analyst certification and other important disclosures at the back of this report 2

2 Exhibit 1: Indonesia s export value, aggregate price and volume growth in Sep-18 Components Value Growth (YoY) Price Growth (YoY) Volume Growth (YoY) Total Export 3.59% -1.36% 10.51% Oil and Gas -0.44% 35.78% % Non Oil and Gas 4.03% -8.47% 13.65% Total Import 23.66% 14.50% 7.99% Oil and Gas 31.78% 37.96% -4.47% Non Oil and Gas 22.17% 7.65% 13.48% Source: BPS Exhibit 2: Export and several commodity prices (monthly average) growth Source: BPS, Bloomberg Exhibit 3: Indonesia s export and import volume growth in 2018 Source: BPS Please see analyst certification and other important disclosures at the back of this report 3

3 Exhibit 4: Key macroeconomic indicators Year-end 31-Dec 14A 15A 16A 17A 18F 19F Nominal GDP (Rp tn) 10,543 11,541 12,407 13,588 14,878 16,184 Nominal GDP (USD bn) ,015 1,038 1,074 GDP/capita (USD) - Nominal 3,530 3,377 3,605 3,877 3,918 4,021 Real GDP (%YoY) Private Consumption (%YoY) Government consumption (%YoY) Gross Fixed Capital Formation (%YoY Exports (%YoY) Imports (%YoY) Inflation rate (%YoY) - year end Core inflation rate (%YoY) - year end BI Rate BI 7 Days Reverse Repo Rate - year end Rupiah / US Dollar - average 11,878 13,398 13,473 13,380 14,329 15,073 Rupiah / US Dollar - year end 12,440 13,788 13,346 13,555 15,190 14,777 Current account as % of GDP Fiscal balance as % of GDP Source: BI, BPS, MoF, Ciptadana estimates Please see analyst certification and other important disclosures at the back of this report 4

4 HEAD OF RESEARCH ANALYST ANALYST Arief Budiman Erni Marsella Siahaan, CFA Yasmin Soulisa Strategy, Automotive, Heavy Equipment, Banking Property, Plantations Construction, Oil & Gas T ext 919 T ext 799 T ext 819 E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com E budimanarief@ciptadana.com ECONOMIST ANALYST ANALYST Imanuel Reinaldo Fahressi Fahalmesta Stella Amelinda T ext 820 Cement, Toll Road, Poultry Consumer, Cigarette E reinaldoimanuel@ciptadana.com T ext 735 T ext 740 E fahalmestafahressi@ciptadana.com E amelindastella@ciptadana.com ANALYST ANALYST ANALYST Robert Sebastian Thomas Radityo Gani Retail, Healthcare Coal, Metal Mining Telco, Tower, Media T ext 760 T ext 739 T ext 734 E sebastianrobert@ciptadana.com E radityothomas@ciptadana.com E gani@ciptadana.com TECHNICAL ANALYST RESEARCH ASSISTANT Trevor Gasman Sumarni T ext 934 T ext 920 E gasmantrevor@ciptadana.com E sumarni@ciptadana.com EQUITY SALES Co HEAD OF INSTITUTIONAL SALES Dadang Mulyana Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2 Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59 Jakarta Jakarta T ext 838 T ext 807 Co HEAD OF INSTITUTIONAL SALES The Fei Ming F F E mulyanadadang@ciptadana.com E thefeiming@ciptadana.com BRANCH OFFICES JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6 Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman Jakarta Jakarta Surabaya T T T F F F Please see analyst certification and other important disclosures at the back of this report 5

5 Analyst Certification Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation. Disclaimer This report does not constitute an offer to buy or sell any security/instrument, invitation to offer or recommendation to enter into any transaction. Nor are we acting in any other capacity as a fiduciary to you. When making and investment decision, you should d etermine, without reliance upon us or our affiliates, the economic risks and merits (and independently determine that you are able to assume these risks) as well as the legal, tax and accounting characterizations and consequences of any such transaction. In this regard, by accepting this report, you acknowledge that (a) we are not in the business of providing (and you are not relying on us for) legal, tax or accounting advice, (b) there may be legal, tax or accounting risks associated with any transaction, (c) you should receive (and rely on) separate and qualified legal, tax and accounting advice and (d) you should apprise senior management in your organization as to such legal, tax and accounting advice (and any risks associated with any transaction and our disclaimer as to these matters. The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate, current, complete, or error free. Assumptions, estimates and opinions contained in this report constitute our judgment as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. PT CIPTADANA SECURITIES AND ITS AFFILIATES SPECIFICALLY DISCLAIMS ALL LIABILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR OTHER LOSSES OR DAMAGES INCLUDING LOSS OF PROFITS INCURRED BY YOU OR ANY THIRD PARTY THAT MAY ARISE FROM ANY RELIANCE ON THIS REPORT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESS OR TIMELINESS THEREOF. Disclaimer: This document is not intended to be an offer, or a solicitation of an offer, to buy or sell relevant securities (i.e. securities mentioned herein or of the same issuer and options, warrants or rights to or interest in any such securities). The information and opinions contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. No representation or warranty, expressed or implied, is made by PT CIPTADANA SECURITIES or any other member of the Ciptadana Capital, including any other member of the Ciptadana Group of Companies from whom this document may be received, as to the accuracy or completeness of the information contained herein. All opinions and estimates in this report constitute our judgment as of this date and there can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. The information in this document is subject to change without notice; its accuracy is not guaranteed; and it may be incomplete or condensed. Please see analyst certification and other important disclosures at the back of this report 6