Previously on Sharpfokus
Rp 💰 Sharpfokus121
January 7th, 2020
⏰ 2 minute read
⏰ 2 minute read
Rupiah is strengthening
2019
Happy new year 2020! It’s going to be a good one! How do we know? Because we ended the last year on a high note. If a recession is technically 2 consecutive quarters of negative growth from a year ago, then the most positive signal to us is 2 consecutive quarters of year on year appreciation of the rupiah... & that’s exactly what happened in the second half of 2019.
Decade
Rupiah
The last decade of course had great moments, but on average is wasn’t nearly as great as the previous one. Perhaps the leading indicator of this was the weakness of the rupiah. By 2002 the rupiah had been depreciating at an annual rate of 50 to 60%, but the rate of decline slowed over the next years & by 2008 the rupiah had started to appreciate to below 9,000. Then from 2008 to 2001, the appreciation stopped & from 2011 the currency declined, reaching an average annual depreciation rate of close to 10% by 2018.
GDP
During the same period, the economy also slowed down. We measure nominal GDP rather than real & the growth slowed from over 20% to only 6% by the 3Q of 2019, possibly even less in the 4Q. The domestic economy slowed even more & if we use imports as a proxy they’re less now than they were in 2011.
Stocks
Stock market returns not surprisingly have been even more leveraged than the economy. The rate of growth of stocks has slowed down from over 50%, first down to 20% & then down to zero by the end of 2018. In 2019 the growth was a little better at 5%, but still very slow, less than both GDP & interest rates.
Stocks
Top 10
The slowdown in growth of the stock market index has masked an even weaker performance internally. One way we can see this is from the weight of the largest stocks. While there have been great performances for example BCA reached a market value of $50bn & then $60bn last year; the top 10 stocks have had a huge 50% weight of the total market value, leaving only 50% for all the other 660 stocks.
Average
At the lower end of the market, the weak performance is even more extreme than that. Just over a decade ago when the market was at it’s then peak close to 3,000, the average price of all the listed companies was 2,865. Today, while the index at 6,000, is double that level, the avenger price of the now 672 listed companies is half what it was, 1,448!
Gap
The gap with the market potential is also now huge. We measure the potential of the JCI index by comparing it with nominal GDP starting from a base of1996. If we us the actual as a percentage of potential, from over 100% in 1998, the ratio collapsed to 2002 before recovering to 70% by 2008. Even with slower GDP growth, this ratio has declined almost in half to now right just 36% of our nominal GDP potential .
2020
Rupiah
So what’s going to happen this year? In truth what we think is coming has already started to happen. The devaluation rate of the rupiah peaked in 2016 when the rupiah first got to 14,000. The market is about to wake up to the surprise realization that the rupiah is now strengthening & we could see a very strong move in our currency this year.
Growth
Thanks to the appreciation of the rupiah, even while nominal GDP has been slowing to mid single digits, in $ terms our economy is already back to double digit growth & rising. Growth in $ terms always leads rupiah growth, so we expect the economy (in rupiah) to grow much faster in 2020 & listed companies sales growth, which is nominal GDP, to accelerate too.
Stocks
Stock market returns have also quietly started to rise. The lowest & negative growth for stocks was also back in 2016 & we are now at 5% & rising. The stock market growth will now recover back towards 20% & above . This next decade, the gap with the potential as measured by GDP will go above the previous 70% level & head towards 100% parity again. We are going to have the greatest decade for stocks, we have ever had.
Sharpfokus
Most importantly of all we are going to have a major broadening out of the stock market. We’ve shown how narrow things have become, so there’s now a huge opportunity to invest in some great mid to smaller sized companies (& some large ones). With more stocks than ever to choose from, it’s going to require some hard work on research. We are here to do that for you & Sharpfokus Saham now covers 74 stocks & rising. We’ve already found plenty we think have the potential to rise multiple times.
Be a great investor!
Sebastian
The previous lifetime deal has expired, but we are offering a new one for Rp750k. Monthly subscription is up to Rp150k.if you’re interested, create an account here & we will contact you.
Happy new year 2020! It’s going to be a good one! How do we know? Because we ended the last year on a high note. If a recession is technically 2 consecutive quarters of negative growth from a year ago, then the most positive signal to us is 2 consecutive quarters of year on year appreciation of the rupiah... & that’s exactly what happened in the second half of 2019.
Decade
Rupiah
The last decade of course had great moments, but on average is wasn’t nearly as great as the previous one. Perhaps the leading indicator of this was the weakness of the rupiah. By 2002 the rupiah had been depreciating at an annual rate of 50 to 60%, but the rate of decline slowed over the next years & by 2008 the rupiah had started to appreciate to below 9,000. Then from 2008 to 2001, the appreciation stopped & from 2011 the currency declined, reaching an average annual depreciation rate of close to 10% by 2018.
GDP
During the same period, the economy also slowed down. We measure nominal GDP rather than real & the growth slowed from over 20% to only 6% by the 3Q of 2019, possibly even less in the 4Q. The domestic economy slowed even more & if we use imports as a proxy they’re less now than they were in 2011.
Stocks
Stock market returns not surprisingly have been even more leveraged than the economy. The rate of growth of stocks has slowed down from over 50%, first down to 20% & then down to zero by the end of 2018. In 2019 the growth was a little better at 5%, but still very slow, less than both GDP & interest rates.
Stocks
Top 10
The slowdown in growth of the stock market index has masked an even weaker performance internally. One way we can see this is from the weight of the largest stocks. While there have been great performances for example BCA reached a market value of $50bn & then $60bn last year; the top 10 stocks have had a huge 50% weight of the total market value, leaving only 50% for all the other 660 stocks.
Average
At the lower end of the market, the weak performance is even more extreme than that. Just over a decade ago when the market was at it’s then peak close to 3,000, the average price of all the listed companies was 2,865. Today, while the index at 6,000, is double that level, the avenger price of the now 672 listed companies is half what it was, 1,448!
Gap
The gap with the market potential is also now huge. We measure the potential of the JCI index by comparing it with nominal GDP starting from a base of1996. If we us the actual as a percentage of potential, from over 100% in 1998, the ratio collapsed to 2002 before recovering to 70% by 2008. Even with slower GDP growth, this ratio has declined almost in half to now right just 36% of our nominal GDP potential .
2020
Rupiah
So what’s going to happen this year? In truth what we think is coming has already started to happen. The devaluation rate of the rupiah peaked in 2016 when the rupiah first got to 14,000. The market is about to wake up to the surprise realization that the rupiah is now strengthening & we could see a very strong move in our currency this year.
Growth
Thanks to the appreciation of the rupiah, even while nominal GDP has been slowing to mid single digits, in $ terms our economy is already back to double digit growth & rising. Growth in $ terms always leads rupiah growth, so we expect the economy (in rupiah) to grow much faster in 2020 & listed companies sales growth, which is nominal GDP, to accelerate too.
Stocks
Stock market returns have also quietly started to rise. The lowest & negative growth for stocks was also back in 2016 & we are now at 5% & rising. The stock market growth will now recover back towards 20% & above . This next decade, the gap with the potential as measured by GDP will go above the previous 70% level & head towards 100% parity again. We are going to have the greatest decade for stocks, we have ever had.
Sharpfokus
Most importantly of all we are going to have a major broadening out of the stock market. We’ve shown how narrow things have become, so there’s now a huge opportunity to invest in some great mid to smaller sized companies (& some large ones). With more stocks than ever to choose from, it’s going to require some hard work on research. We are here to do that for you & Sharpfokus Saham now covers 74 stocks & rising. We’ve already found plenty we think have the potential to rise multiple times.
Be a great investor!
Sebastian
The previous lifetime deal has expired, but we are offering a new one for Rp750k. Monthly subscription is up to Rp150k.if you’re interested, create an account here & we will contact you.
