Premier Fund Monitor - The Week Ahead : Asian stocks fell amid China tech cracdown,widening performance gap vs.DM equities
Monday, August 02, 2021       09:30 WIB

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Asian stocks underperformed DM equities amid China tech crackdown
Developed Markets equities were down slightly amid the spread of Covid delta variant and concerns over slowing recovery while Asian markets corrected more significantly this week amid China's regulatory crackdown of the tech sector. As such, the gap between DM and EM stock market returns since the start of 2021 has widened. In US, the CDC's revised guidance for vaccinated individuals to wear masks again indoor in high-transmission areas has dampened sentiment, as also lower-than-expected economic data releases. US GDP growth of 6.5% annualized in Q2 (vs. Q1) came significantly below consensus forecast of 8.5%. Also missing expectations were June durable goods order growth of 0.8% MoM (vs. 2.1% cons), new and pending home sales, and weekly initial jobless claims (400K vs. 380K cons.). Meanwhile, US personal income and spending growth in June were better than expected. On the other hand, US has a stellar earnings season in Q2 as 88.5% of the 296 companies that have reported earnings to date beat expectations and aggregate earnings is expected to grow 90% YoY in Q2. In the bond market, 10-yr UST yield edged lower to 1.23% (-5 bps) as US core PCE price index rose 0.4% MoM in June (vs. 0.6% cons.), indicating an easing of inflationary pressures, while FOMC meeting on July 27-28 maintained policy stance.
In Indonesia, JCI corrected (-0.52%) on the back of Rp621Bn foreign outflows. Most of the large cap stocks declined, particularly those in banking, consumer, healthcare, industrials, basic materials, and property sectors while infrastructure, energy and metals mining stocks were the few gainers in the market.
 The     Week     Ahead    - Indonesia GDP Growth Rate, US Jobs Reports
The key economic calendar to watch out for next week include Indonesia Markit Manufacturing PMI (Mon 07:30), China Caixin Manufacturing PMI (Mon 08:45), Indonesia Inflation Rate (Mon 11:00), US ADP (Private Sector) Job Growth (Wed 19:15), Indonesia GDP Growth Rate (Thu 11:00), US Jobless Claims (Thu 19:30), US Non Farm Payrolls and Unemployment Rate (Fri 19:30).
Investment Conclusion
Global equities have priced-in strong growth recovery in 2021 but the key issue for markets this year has shifted to inflation, as reflected in rising bond yields, as this could lead to monetary policy tightening in the advanced economies. An unexpected shift in Fed's monetary policy (eg. taper, rate hike) could unsettle global markets and lead to fund outflows from EMs. However, we view the risks to Indonesia are lower now than in 2013 as a Fed tapering is already expected (unlike in 2013), Indonesia country risk indicators have improved, and its bond market is now more resilient. We reiterate our 2021 JCI target of 6,600
Recommendation
We have recommended investors to stay defensive since before the pandemic, with our broad-based ETFs RLQ45, (IDX30), (Pefindo i-Grade), and ESG ETF (Sri Kehati) to minimize volatility. Both and have overweight positions in , widely considered as defensive stock at times of uncertainty. has managed to closely follow JCI performances in 2021 and outperformed other broad-based ETFs due to its overweight of cyclicals, including in banking & basic materials sectors, and underweight of defensive stocks in the portfolio. As such, is exposed to sectors that should benefit the most from economic recovery while still maintaining defensiveness through overweight exposure in . Meanwhile, Environmental, Social & Governance (ESG) ETFs globally saw record inflows in 2020 amid pandemic and we expect the trend of investing in ESG funds to continue. We also like ETF ( MSCI Indonesia Large Cap) for its constituent of mainly blue-chip stocks.
Meanwhile, (SM-Infra18) and (SOEs) focused on SOEs in infrastructure and financial sectors, lacked defensive constituents such as and consumer stocks, and thus may be viewed as riskier during the pandemic. However, these two ETFs also have lowest valuation among of our ETF universe, with 2021F P/E of 14.2x and 13.8x respectively, which are lower than valuation of our broad- based ETFs RLQ45 (at 15.8x), (at 15.5x), (at 14.9x) and (at 17.8x), and may have more upside potential if investors once again are rotating away from defensive sectors into cyclical stocks, although we believe this is unlikely given renewed lockdowns in Indonesia.

Sumber : IndoPremier Investment
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