Indonesia economy has fully resumed following Eid Al-Fitr celebration. The festivity's holiday was 10 days long, pausing the capital market activity as some traveled back to their hometown.
During the homecoming season, some important events happened, starting from higher-than-expected US inflation rate, inverted yield curve of the US treasury yield, and what we want to highlight the most, is the middle east tension escalation.
US Treasury Yield Comparison (2:56 AM EDT)
As reported on the news, Iran launched an attack to Israel as a response to a suspected Israeli strike on the Iranian consulate in Damascus, Syria, earlier this month. This has caused Brent crude price to spiked up above USD 91 / barrel on April 12th, a reflection of investors' concern upon the future of oil supply.
On 2021, Iran exported USD32.2bn worth of mineral fuels, oils, and distillation products, comprising 48% of its total export value. Over the past two years, Iranian crude production has experienced a surge of over 20%, reaching 3.4 million barrels per day. This figure accounts for approximately 3.3% of the global supply.
Iran Exports by Category (% of total exports)
Source: Trading Economics
Considering the development of recent global events, investors are likely to mitigate and avoid risk premiums as geopolitics heads south. This is likely to trigger further capital outflow from JCI as investors shifts to safe-haven assets, sending gold price and US Dollar demand soaring sky high.
That being said, we still see that there's a good possibility that energy supply disruption may outweigh weaker-than-usual demand from slow global economy recovery. We see a trading buy opportunity on energy related stocks upon this momentum considering the supportive top-down analysis. Therefore, we recommend to include MEDC and PGAS to the watchlist to utilize oil price hike momentum considering their relatively positive correlation towards Brent crude oil price.
6M Comparison of MEDC, PGAS and Brent Crude Oil Chart
MDKA and ANTM surely enough made it to the shortlist should one want to utilize gold price hike momentum. As previously mentioned, the demand for gold is likely to escalate higher amidst the uncertainties. Therefore, ANTM is likely to benefit from the higher gold demand which translates to higher gold sales. meanwhile, MDKA is currently trading at an attractive valuation as the current price only reflects Pani’s NPV + MBM’s market cap, without accounting for TB copper’s huge resources. We favor MDKA for its huge and well-diversified resources.