Pt Bank Central Asia Tbk · IDX:BBCA
Pt Bank Central Asia Tbk — Investor Presentation (January 2025)
50 slides from Pt Bank Central Asia Tbk's investor presentation, Jan 21, 2025
Slide 1: Global Economic Outlook 2025
Global Economic Outlook 2025 A sliver of light, but dark clouds are all around Lazuardin Thariq Hamzah Nicholas Husni Barra Kukuh Mamia Economist/Analyst Economist/Analyst Head of Macroeconomic Analyst
Slide 2: Summary and Table of Contents
Summary Table of contents Part A snapshot 1: Introduction of the year’s past 3 ▪ High interest rates in the US (and expensive USD) may continue to be a 3 Part 1: Introduction concern for the global economy, as the US government is expected to A snapshot of the year’s past boost its debt issuance. At
Slide 3: Part 1: Introduction – Chapter Summary
Chapter Summary ▪ The stalling disinflation progress delays the widely Part 1: anticipated FFR cut until the end of Q3-2024. FOMC members’ limited use of forward guidance, and the expected shift in US policies under President Trump, have lessened the Fed’s control over long-term US Introduction inte
Slide 4: The global economy is stuck in the middle throughout 2024
The global economy is stuck in the Chart 1.1 The Indonesian economy tends to rally during an environment of loose liquidity middle throughout 2024 and high commodity prices, and vice versa 100% ▪ The global economy continued ▪ A top-left swing (see chart 1.1), Commodity to move towards relative wher
Slide 5: The US economy remains strong, but economic misery lingers
The US economy remains strong, but economic misery lingers Chart 1.2 The US economy continues to record robust growth, but the upward trend in the unemployment rate encouraged the Fed to start its rate-cutting cycle with an initial 50-bps cuts despite the stagnating progress towards 2% inflation. 15
Slide 6: China offers recourse for consumers, but at the cost of manufacturers
China offers recourse for consumers, but at the cost of manufacturers Chart 1.3 Chart 1.4 Lower factory gate prices in China reduce import prices globally, given that the weak Accelerating exports in China coincide with periods of industrial slowdown in big demand in China gives no option to manufac
Slide 7: Commodity prices flatlined, albeit not far from its record high
Commodity prices flatlined, albeit not far from its record high Chart 1.5 Stagnating global manufacturing activities dragged energy and other industrial materials prices lower, but consumers are still reeling from high food prices. ▪ Meanwhile, further normali- ▪ Unfortunately, there is still a 200
Slide 8: US financial conditions continue to tighten despite the lower FFR
US financial conditions continue to tighten despite the lower FFR Chart 1.6 The benchmark 10Y UST yield continue to increase despite FFR cuts in 2024, driven by the projected higher deficits and returning inflation expectations under the upcoming Trump presidency. ▪ The flatlining commodity prices,
Slide 9: Part 2: Of rates and policies – Chapter Summary
Chapter Summary ▪ The expected higher debt issuance and longer duration in the UST market may keep the long-term UST yield high, which may prompt the Fed to slow its balance sheet runoff as the occasional spike in the money market rate also highlights the Part 2: Of not-so-ample condition in US bank
Slide 10: Interest rates in the US may have become structurally higher
Interest rates in the US may have become structurally higher Chart 2.1 Returning inflationary pressures, the higher neutral interest rate, and the expected ▪ Economic discussion have poin- ▪ However, speculations over US increase in long-term bond issuance may keep the benchmark US interest rate hig
Slide 11: Long-term rates may continue to be elevated as duration normalise
Long-term rates may continue to be elevated as duration normalise Chart 2.2 The increasing concentration risk in the T-bills market may necessitate the upcoming US Treasury secretary to issue more long-term bonds. 600 USD Bn % 1.8 ▪ Apart from the fiscal balance, ▪ The next Treasury Secretary, the U
Slide 12: A shock in the UST market may add the argument for the Fed to rethink its QT
A shock in the UST market may add the argument for the Fed to rethink its QT Chart 2.3 campaign Despite the stable US bank reserves, the dwindling RRP balance and spiking long- term UST yield may put an end to the Fed’s balance sheet run-off. ▪ The positive liquidity effect ▪ The Fed have introduced
Slide 13: The market does not expect Fed policies to loosen significantly in 2025
The market does not expect Fed policies to loosen significantly in 2025 Chart 2.4 Chart 2.5 The market is expecting the Fed to neither far nor fast in its rate-cutting campaign in The sticky services and shelter inflation continue to stand in the way between the Fed 2025, given the still robust econ
Slide 14: President-elect Trump's policy agenda may have put the Fed further into quandary
President-elect Trump’s policy agenda may have put the Fed further into Chart 2.6 A tighter immigration policy may bring back inflation to the US, given that the quandary… economy remains reliant on foreign-born workers to relieve the still-tight labour market. ▪ Many analysts have fired a ▪ The pot
Slide 15: …although the sticky rental inflation may eventually come unstuck
…although the sticky rental inflation may eventually come unstuck Chart 2.7 Chart 2.8 Rental inflation continue to decline, thanks to lower migration to the denser northern Housing inventories in the US are improving, especially in the southern and western states and the higher rental supplies, espe
Slide 16: A continuously strong USD is unfavourable, even for the US
A continuously strong USD is unfavourable, even for the US Chart 2.9 Periods of higher USD value often coincide with strong inflows to the US financial ▪ The Fed’s hawkish New Year ▪ However, as indicated by the market, up to the point when the highly concentrated US market compels message, along wi
Slide 17: The European bond market may add to the challenge for the UST market
The European bond market may add to the challenge for the UST market Chart 2.10 European economies’ budget balance is expected to even more gradually return to its pre-pandemic level, portending higher debt issuance in some European ▪ The generally undervalued ▪ At the same time, many Euro- economic
Slide 18: The recent USD strengthening is especially harmful for Asia's anchor currencies
The recent USD strengthening is Chart 2.11 The downward trend in the USD index ends abruptly as the outcome od the especially harmful for Asia’s anchor recent US election brought uncertainties back to the global economy in general and Asian economies in particular. currencies CNY -3.0% -3.1% 2.3% ▪
Slide 19: The stop-start approach for policy normalisation heighten the JPY's volatility
The stop-start approach for policy normalisation heighten the JPY’s Chart 2.12 volatility Still-wide rate differences between the US and Japan compound the pressure on the JPY, but the gap should narrow as the BoJ is expected to continue normalising ▪ While the JPY did not suffer ▪ The looming globa
Slide 20: Returning private sector liquidity may protect the US from BoJ's policy normalisation
Returning private sector liquidity may protect the US from BoJ’s policy Chart 2.13 Japanese investors reacted to the end of NIRP by selling their UST holdings. normalisation However, the stable demand from tax haven economies helps to calm the market amid concerns over carry trade unwinding. ▪ The B
Slide 21: Part 3: The China factor – Chapter Summary
Chapter Summary ▪ The looming trade war will hit the sentiment on the Chinese economy the hardest, meaning that the RMB may continue to face significant downward pressure in 2025. ▪ Further stimulus packages are to be expected in China, with the central government signalling its intention to issue m
Slide 22: Anaemic domestic demand and less-friendly external conditions whipsawed China
Anaemic domestic demand and less- friendly external conditions whipsawed Chart 3.1 China The CNY responded quickly to the announcement of higher US import tariffs, while a lull in the trade war often coincides with the period of strengthening CNY. 25 7.4 ▪ Another thing for Asian curre- ▪ Domestic p
Slide 23: The property sector remains an urgent concern
The property sector remains an urgent concern Chart 3.2 Chart 3.3 China’s property supply overhang continue to widen in 2024 as government initiatives At the same time, developers remain wary of launching new building projects as help developers finish stalled projects while sales remain subdued. pr
Slide 24: The hitherto inefficient stimuli may compel China to double down on fiscal interventions
The hitherto inefficient stimuli may compel China to double down on fiscal Chart 3.4 interventions Monetary stimuli are insofar unable to re-energise money creation in China, ▪ External demand is expected to ▪ The increase in the 2025 deficit necessitating the government to launch a sizable fiscal s
Slide 25: Debt concerns may remain the focus for China's fiscal stimulus
Debt concerns may remain the focus for China’s fiscal stimulus Chart 3.5 Chart 3.6 China’s recent stimulus package is intended to put a guardrail around its highly- China’s problem with its highly-leveraged private sector is unique compared to other leveraged private sector, putting consumption lowe
Slide 26: China's lending remains concentrated in the manufacturing sector
China’s lending remains concentrated in the manufacturing sector Chart 3.7 Chart 3.8 Chinese banks may not rely on the corporate sector to drive new loans, as the tariff Chinese authorities cannot rely on other sectors but the manufacturing sector to drive threat haunt the Chinese industrial sector.
Slide 27: China may continue to export deflation to the global economy…
China may continue to export deflation to the global economy… Chart 3.9 Chart 3.10 China’s investments are diverging even further as weak domestic demand narrows A higher export volume will be crucial to free up the space for Chinese manufacturers their options, leaving manufacturing as the only via
Slide 28: …as margin advantage allows exporters to continue competing on prices
…as margin advantage allows Chart 3.11 exporters to continue competing on Cheap credit lines to the manufacturing sector may explain the continued manufacturing expansion in China despite the palpable margin and profit squeeze. prices 30 Total industrial profits, YTD YoY ▪ Luckily, Chinese exporters
Slide 29: Growth momentum in China may remain exclusive to some sectors
Growth momentum in China may Chart 3.12 remain exclusive to some sectors The PMI index that track export-oriented, mostly private companies stay in the expansionary zone for most part of 2024, unlike the index that tracks domestic- oriented companies. 52 ▪ It should be noted, however, ▪ Unfortunatel
Slide 30: High-tech sectors will remain as the main driver of Chinese growth
High-tech sectors will remain as the main driver of Chinese growth Chart 3.13-14 Chart 3.15-16 China’s high-tech sectors continue to record higher outputs. At the same time, certain energy-intensive industries are driving into the sunset. 280 Naphtha Cement 241 100 180 80 71 80 60 Feb-17 Sep-19 Apr-
Slide 31: Continued manufacturing expansion provides a floor for the global commodity demand
Continued manufacturing expansion Chart 3.17 provides a floor for the global Continued expansion in the Chinese manufacturing sector will be needed to sustain the improvement in the physical demand for industrial commodities. commodity demand 120 Th. of active contracts ▪ Hence, while we maintain ou
Slide 32: Part 4: The commodity market – Chapter Summary
Chapter Summary ▪ China’s housing crisis continues to weigh on industrial metal demand, but prices remain supported by supply constraints. Meanwhile coal demand persists propped by the country’s manufacturing in high-tech and green energy products. However, Part 4: The seaborne coal may face some ch
Slide 33: Metal demand remains limited as China's slowdown continues
Metal demand remains limited as China’s slowdown continues Chart 4.1 Chart 4.2 Nickel demand growth began to rebound late into the year, but prices have yet to Copper demand continue to slump, but prices remain supported by a simultaneous reflect this recovery and continue to decline. drop in supply
Slide 34: Sluggish demand puts oil prices in check
Sluggish demand puts oil prices in check Chart 4.3 Oil prices have been declining, largely driven by a global economic slowdown that ▪ The oil market in 2024 conti- ▪ Despite heightened geopolitical has dampened demand. nues to face downward pres- tensions in the Middle East, oil 12 %, YoY 145.31 %,
Slide 35: Coal demand has plateaued, but prices remain supported
Coal demand has plateaued, but prices remain supported Chart 4.4 Coal demand has stabilized, followed by supply, while prices have declined but ▪ Coal demand has plateaued in ▪ Coal prices have receded from remain elevated above pre-pandemic levels. 8% 200% 2024, as demand in advancing the highs of
Slide 36: China's ambition toward self-sufficiency boosted growth on clean energy sector
China’s ambition toward self-sufficiency boosted growth on clean energy sector Chart 4.5 Chart 4.6 Continued government support on clean energy technology provide a strong Strong growth in renewable energy output highlight China’s commitment to clean manufacturing capacity in China’s “New Three” (Ch
Slide 37: China's coal continue to stockpile
China’s coal continue to stockpile Chart 4.7 Although coal imports have slowed, much of the imported coal is being allocated ▪ China continues to play a pivotal ▪ Coal demand projections for to stockpiles rather than immediate use. role in shaping global coal China in 2024 might be 250 800 prices. T
Slide 38: Rising competition to seaborne coal
Rising competition to seaborne coal Chart 4.8 Chart 4.9 Seaborne coal trade experience a negative growth throughout 2024. Mongolia’s coal exports to China continue to increase after the construction of Shivee Kuren – Ceke rail in October 2023. 30% 400 Bn tonne 348.3 China’s coal import, from countri
Slide 39: Europe's cheap electricity, another blow for seaborne coal
Europe’s cheap electricity, another blow for seaborne coal Chart 4.10 Electricity prices continued to drop all across Europe, although still higher than ▪ Europe’s extensive adoption ▪ The issue is further compou- pre-pandemic level. of renewable energy has nded by Europe’s declining 400 brought an
Slide 40: Food price to rise as global temperature entering La Niña
Food price to rise as global temperature entering La Niña Chart 4.11 Both La Niña and El Niño events frequently disrupt agricultural harvests, but La Niña ▪ Global temperatures are ▪ An extreme La Niña event could tends to have a more disruptive effect on food prices. 90 % YoY 3 heading toward anoth
Slide 41: The golden surge may continue in 2025, although at a slower pace
The golden surge may continue in Chart 4.12 The 10-year U.S. Treasury yield remained elevated as expectations for Fed rate cuts 2025, although at a slower pace have slowed. However, gold prices have continued to rise despite higher yields. 3000 -5 2,639 Gold Prices (USD/oz) -2.5 10Y real UST yield -
Slide 42: 2025 commodity expectations
2025 commodity expectations Coal (Newcastle) CPO USD/MT RM/MT ▪ The outlook for industrial metals ▪ Oil prices are anticipated to stabilize remains subdued due to China’s as global activity continue to prolonged property sector downturn. moderate, further dampened by However, demand for nickel and T
Slide 43: Part 5: Scenario analysis – Chapter Summary
Chapter Summary ▪ External conditions are unlikely to benefit Indonesia Part 5: in 2025, given the expected flat demand for commodities and still-high global interest rates thanks to the higher debt issuance and limited room for additional rate cuts in the US. Scenario ▪ The US economy’s inability t
Slide 44: 2025 scenario: Dark clouds here and there
2025 scenario: Dark clouds here and there Worst case scenario* Baseline scenario Best case scenario* How things may unfold: How things may unfold: How things may unfold: ▪ UST yields rise even higher due to lower fore- ▪ Higher debt issuance due to TCJA provisions ▪ Better fiscal efficiency and more
Slide 45: External conditions are unlikely to benefit Indonesia in 2025
Baseline scenario: Probability: External conditions are unlikely to benefit Indonesia in 2025 60% Yes Implications to the Indonesian economy: China answers the call to boost its aggregate demand Yes Yes Exchange Current Growth rates account potential ▪ High UST yields and persisting pressures on Asi
Slide 46: Bond vigilantes may start a domino that may overwhelm EMs (including Indonesia)
Worst case scenario: Probability: Bond vigilantes may start a domino that may overwhelm EMs 25% Yes (including Indonesia) High long-term Implications to the Indonesian economy: yields not a Baseline significant scenario hindrance for US economic growth Yes Exchange Current Growth rates account poten
Slide 47: Favourable policies in China may allow the Indonesian economy to recover
Best case scenario: Probability: Favourable policies in China may Yes Best case allow the Indonesian economy to 15% The Fed turns dovish to avoid risks in the scenario financial market recover Yes Implications to the Indonesian economy: China answers the call to boost its No aggregate demand Exchang
Slide 48: Projections of Indonesian economic indicators
Projections of Indonesian economic indicators 2019 2020 2021 2022 2023 2024E 2025E Real GDP growth (% YoY) 5.0 -2.1 3.7 5.3 5.0 5.0 4.9 Nominal GDP growth (% YoY) 6.7 -2.5 9.9 15.4 6.7 7.0 7.9 GDP per capita (USD) 4175 3912 4350 4784 4920 4975 5005 CPI inflation (% YoY) 2.7 1.7 1.9 5.5 2.6 1.6# 2.5
Slide 49: BCA Economic and Industry Research
BCA Economic and Industry Research David E. Sumual Agus Salim Hardjodinoto Barra Kukuh Mamia Chief Economist Head of Industry and Regional Research Head of Macroeconomic Research david_sumual@bca.co.id agus_lim@bca.co.id barra_mamia@bca.co.id +6221 2358 8000 Ext: 1051352 +6221 2358 8000 Ext: 1005314
Slide 50: Economic and Industry Research
Economic and Industry Research
PT Bank Central Asia — Investor Presentation (January 2025) on 6ix