November 2016 3rd Week

18 november 2016

Categories : IR Weekly Review


  • MACRO
    • The head of the Federal Reserve Bank of Jannet Yellen announced on the economic outlook before the congressional Joint Economic Committee, indicated that there would be changes following the election victory of Donald Trump on yesterday. He said that the Fed remained on track to raise interest rates at a meeting next month. It was estimated that the Fed would raise the interest rates in December. Reported by Reuters on Friday (11/18/2016), it also made the dollar stronger. The exchange rate of the dollar against six other currencies extended its gain after Yellen's comments. The dollar rose 5 percent. While the US stock market, which rose after Donald Trump shocked the public because it won the election, also rose, led by a 1.3 percent rise in the financial sector, which is favorable for higher interest rates. "The rate hike is already. Several speakers indicated that the Fed and the markets they want to be prepared for it," said Erik Wytenus, global investment specialist at JP Morgan bank.

    • The International Monetary Fund (IMF) has lifted the sanctions against Zimbabwe after this southern African country's arrears during 15-year debt to the multilateral financial institutions in the last month. Quoted from Xinhua, Wednesday, November 16, 2016, the IMF said financial assistance to Zimbabwe would depend on the other applicable policies included clearing arrears around USD1,15 billion to the World Bank, USD601 million to the African Development Bank (AfDB) and other arrears to multilateral creditors, bilateral official creditors and external private sector. The IMF in a statement published on its website stated that crippled Zimbabwe's economy woulf also require fiscal adjustments and structural reforms in order to qualify for a strong new loans. Facing a severe cash crunch and worsening economy, Zimbabwe last month completed USD108 million in arrears owed to the Poverty Reduction and Growth Trust (PRGT) IMF by using part of its cash holdings are deposited in the Fund.

    • Review:

      The increase of the FED interest rate is primarily driven by the improvement in the US economy in the third quarter of 2016. One of the indicators is the US inflation rate, which is starting to increase. Besides, the victory of Donald Trump also reinforces such action. Trump himself wants to raise the interest rate the FED in order to maintain the stability of the US economy.

  • MICRO
    • Bank Indonesia (BI) decides to revise economic growth next year to be in the range of 5% -5.4%. The projected figure is lower than previously at the level of 5.1% -5.4%. BI Governor Agus DW Martowardojo said the change of economic growth projection was made because the world economy had been weakening in the range of 3% in 2016. This condition is lower than the previous year. In addition, the central bank (BI) predicts credit growth in 2017 ranges from 10% -12%. While the growth of third party funds (DPK) is estimated at between 9% -11%. "So the credit growth that was relatively new would be really ready to recover at the end of the second quarter. Influence on correction of our economic growth," said Agus.

    • Chairman of the Board of Commissioners of the Financial Services Authority (FSA), Hadad Hadad believes that the money withdrawal movement on a large scale or a rush of money on 25 November 2016 will not happen. He hopes that the issue is only a rumor going on social media alone. He says the current financial industry in a healthy condition. So, if the withdrawal of money on a large scale happens, it is not caused by the banking industry. He also questiones where the money will be saved if they wil pull it massively. "Then the question would be where they save or put their money after withdrawal, are they gonna put them under pillows?  Hopefully this rumor, I am optimistic that this will not happen," he concludes.

    • Review:                                                                                                                                     

      Correction by Bank Indonesia is quite appropriate in the assessment of Indonesia's economic growth in the future. It is also not free from references to the world economic growth. Indonesia needs to maintain a realistic action as it is today, so that between the projection and realization’s. result is adjusted.

  • BANKING
    • PT Bank Mandiri Tbk (Bank Mandiri) will bring uncooperative debtors to court. This step is performed to accelerate the resolution of problem loans (non-performing loans / NPL). Bank Mandiri’s Corporate Secretary Rohan Hafas revealed, remedies would be done either through civil or criminal actions against the debtors which are indicated to misuse credit, and borrowers who do not have a good payment intention in fulfilling the credit obligations to the bank. Currently,  Rohan continues that the bank has done litigation legal action through the submission of collateral, as well as request for suspension of payment (PKPU) and civil action to the Court. "Nevertheless, we also accelerate the handling of non-performing loans through the criminal path, especially for debtors who are indicated to misuse credit," Rohan said in Jakarta, Tuesday (15/11/2016).

    • PT Bank Rakyat Indonesia Tbk (BRI) is establishing strategic partnership with Lion Air Group. This cooperation provides convenience in utilizing the banking service system, which is fast, convenient, modern, and reliable through a network of outlets and e-channel BRI. Director of Institutional Bank BRI Kuswiyoto say, the scope of strategic cooperation will include the provision of banking services optimized to Lion Air Group. Namely in the form of the development of market access and product marketing network of micro, small and medium enterprises (SMEs). In addition, the utilization of cash management facilities System (CMS), the development of ticket purchasing services via e-Channel, utilization of services and other banking instruments for financial services Lion Air Group. "This cooperation is a form of commitment BRI to increase the accessibility of transactions for millions of customers to enjoy the quality of services BRI Lion Air Group to the best destinations in the country and abroad," he said in Jakarta, Tuesday (15/11/2016).

    • Review

      Legal action or step performed by Bank Mandiri against delinquent debtors is a firmness that when there are uncooperative debtors and may harm the Bank, then legal action can be one of the solutions.

Disclaimer : This document is for informational purposes only and obtained from a variety of reliable sources, but is not a guarantee the accuracy or completeness and should not be relied on completely. The above conditions may be changed at any time. Forbidden to rewrite anything without written permission from The East Java Regional Development Bank