November 06, 2024
Make America Great Again

Market Commentary
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Trump, who previously served as president from 2017 to 2021, secured his first swing state with a victory in North Carolina.

His win was confirmed upon surpassing the 270 electoral college vote threshold by carrying the state of Wisconsin, positioning him to potentially secure all seven swing states.

Prior to the election, Trump pledged to initiate swift diplomatic negotiations aimed at ending the Russia-Ukraine conflict, while Kamala Harris committed to steadfast support for Ukraine in its resistance to Russian aggression. This contrast sets the stage for a significant geopolitical shift contingent on the election's outcome.
 


Trump’s oil policy definitely caught our attention. Focused on maximizing U.S. energy independence, expanding oil production, and reducing regulatory restrictions on the fossil fuel industry with the following key elements:
  • Energy Independence: Trump prioritized making the U.S. a dominant force in global energy by increasing domestic oil production and reducing reliance on foreign oil imports. 
  • Deregulation: Trump rolled back several environmental regulations to ease restrictions on oil and gas companies. This included relaxing restrictions on offshore drilling, federal land use for oil extraction, and environmental review processes for new projects.
  • Expanding Oil and Gas Access: The administration opened up new areas for drilling, such as parts of the Arctic National Wildlife Refuge (ANWR) and other federally controlled lands, to encourage investment and increase production. 
 


Our research team believes that Trump's bold oil policies could dramatically reshape global inflation. By increasing U.S. oil production, Trump aims to reduce oil prices significantly, which could drive inflation towards deflation in United States. 

This shift may pave the way for substantial policy rate cuts, strengthening the rupiah and making Trump’s re-election a pivotal event for Indonesia’s capital markets.

Furthermore, cheaper energy prices could help stabilize the cost of goods, leading to a faster recovery in purchasing power at our country.

 


However, we believe it's wise to pay close attention to market's movement before going long on a stock. As seen on the chart, JCI kept on weakening while also recorded net foreign outflow of IDR1.2tn. Therefore, we recommend to be defensive as we wait further signal of reversal.

 

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