Morning Dew - 29 May 2014

CAD May Widen

Amidst the public holiday-dotted week, the Finance Minister Chatib Basri said that Current Account Deficit (CAD) for the 2Q14 may widen as imports increased due to business expansion. CAD has been traditionally worsening in second quarter, followed by improving current account position in the third and fourth quarter. 

Currently the CAD is expected to be held at 3% of GDP this year. Indonesia’s CAD climbed to its peak in 2Q13 when the amount hit US$10.1bn or 4.4% of GDP.

Foreign Exchange Reserves is expected to be stable throughout the remainder of the year, according to Bank Indonesia. By the end of April 2014, the reserves amounted to US$105.6bn.

Industry Ministry reported a 5.56% growth in non-oil & gas industry in the first quarter 2014, outpacing the GDP which turned out to be slowing down to 5.21% in 1Q14. Strong growth were evident in F&B Processing, Transportation Equipment, Machinery & Equipment, and Farming & Plantation industries. This year the ministry aims at 6.5% growth.

USDIDR fell slightly on Thursday to 11,613 from 11,633.

U.S. Economy Shrunk

US GDP fell 1% in 1Q14, worse than the consensus take which forecast a 0.5% contraction and also weaker than prior quarter’s slight growth of 0.1%.

US initial jobless claims fell to 300k from 327k, better than the consensus figure of 318k.

US pending home sales slowed from 3.4% seen in March on month-on-month basis. Against the same month last year, sales fell 9.4% in April after 7.5% drop in the prior month.

US Personal income and personal spending data are set for release on Friday.

Technically Speaking...

JCI continued to gyrate near the 5k resistance as the market is expected to remain subdued throughout the week.

Beyond the resistance at 5,063/93 the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,900 and 4,868 in the short-term and 4,800 afterwards.

MACD and RSI flattened as market activity slowed. Volume is expected to be thin throughout the week due to holidays on Tuesday and Thursday.

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

Market is set to open on Friday, but as the week has been cut short by public holidays, trading maybe subdued on Friday. Lack of fresh catalysts may dampen trading volume. Positive Dow overnight may help support sentiment however, but still upside is seen limited.

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Morning Dew - 28 May 2014

In A Standstill

As the week is to be cut short by two holidays, investors are expected to prefer staying on the sideline. With hardly any fresh catalysts set to move the market, the JCI is seen trapped in a sideways consolidation move.

BI Governor on Monday said that Indonesia trade balance is expected to be around US$600 million in April 2014, slightly lower than the surplus of US$673 million recorded in March 2014. Improving non-oil and gas exports, stable commodity prices and dissipating impact of Minerba Act are seen behind the April surplus. Declining imports of raw materials are also supporting the surplus, but this could mean slowdown in domestic investment.

No significant economic release is scheduled this week, but next week the May inflation data is set to be released.

IDR started the week on a wrong foot as it continued to weaken to 11,633 from 11,560 vs US$.

U.S. Data Due

US durable goods orders were up 0.8% in April, beating the consensus which forecast a drop of 0.7% but still way slower than 3.6% increase seen in March. 

Excluding transportation items, April orders slowed from 2.9% to 0.1%, slightly better than the consensus forecast.

House price index were up 0.7% in March (MoM), better than the 0.5% increase forecast as well as slightly faster than the 0.6% seen in February.

Consumer confidence also ticked up from 81.7 to 83.0 in May.

Technically Speaking...

JCI slipped slightly on Monday as holiday-shortened week dampened trading appetite. 

Beyond the resistance at 5,063/93 the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,900 and 4,868 in the short-term and 4,800 afterwards.

MACD and RSI flattened as market activity slowed. Volume is expected to be thin 

throughout the week due to holidays on Tuesday and Thursday.

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

Market is closed on Tuesday, but will open as usual on Wednesday. Lack of fresh catalysts may dampen trading volume as the market will be closed again on Friday. Positive Dow overnight may help support sentiment however, but still upside is seen limited.

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Morning Dew - 26 May 2014

Mixed Finish

JCI finished mixed on Friday as lack of catalysts sapped the market activity ahead of holiday-shortened trading sessions next week. No new developments on the political front also sent the investors back into the consolidation period where they will prefer to wait and see and staying on the sidelines for a time being.

Indonesian government has proposed an additional US$6.5 billion to finance fuel subsidies in 2014 while also planning to raise the budget deficit to 2.5% of GDP (more than 1.69% projected initially).

US new home sales were up 6.4% in April (month-on-month) vs. 6.9% decline in March but significantly below the consensus rise of 10.7%.

USDIDR continued to tick higher to 11,560 from 11,515 on Thursday.

Upcoming U.S. Data

The coming week will feature data coming out of U.S.: the durable goods orders for April, the Composite PMI as well as service PMI for May and the consumer confidence index for May.

First quarter U.S. GDP  as well as the personal consumption data for the first quarter are also set for release.

On Thursday, initial jobless claims for the week ending May 17th and the pending home sales for April are scheduled for release.

Technically Speaking...

JCI inched higher on Friday but still short on retaking the 5k mark.

Beyond the resistance at 5,063/93 the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,900 and 4,868 in the short-term and 4,800 afterwards.

MACD and RSI bounced as the index recovered its ground. Volume ticked down on Friday and expected to be thin next week due to holidays on Tuesday and Thursday.

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Week Ahead

Lack of fresh catalysts from domestic and the foreign fronts is likely to send the JCI back into a consolidation period, especially with just three trading sessions available next week. The market will remain cautious over the political dynamics ahead of the July presidential election.

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Morning Dew - 23 May 2014

No Inflation Expected in May

JCI zoomed closer to 5k mark after it tumbled a while back. The rally followed through Wednesday’s rise as waves of profit-taking subsides gradually.

Chinese data played its part in supporting the regional mood which, in turn helped support the JCI. Manufacturing sector in May improved slightly to 49.7 but still below 50 mark which separates contraction and expansion. The reading was better-than-expected 48.3 and way above the prior month’s figure.

Chairul Tanjung, the new Indonesian Coordinating Minister for Economic Affairs said that May inflation could turn out to be negative, or deflated as food prices were stable during the observed period.

USDIDR continued to weaken to 11,515 from 11,507 on Thursday.

US Claims

US Initial Jobless Claims for the week that ended on May 17th was at 326k or better than the forecast 310k as well as worse than a week earlier at 298k.

Existing home sales were up 1.3% in April from a month earlier, less than the consensus rise of 2.2% but the figure reversed the prior month’s sales which declined 0.2%.

US Markit Manufacturing PMI for May showed that the preliminary reading increased to 56.2 from 55.4, better than the consensus figure of 55.5.

Technically Speaking...

JCI continued to advance as it’s closing in towards 5k once more stopping short at 4,968. 

Beyond the resistance at 5,063/93 the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,900 and 4,868 in the short-term and 4,800 afterwards.

MACD and RSI bounced as the index recovered its ground. Volume also ticked up, signaling there is more to be gained in the coming sessions.

No additional recommendation for now.

Day Ahead

China data have lifted sentiment on Thursday, boosting JCI and the regionals. The impact may be carried over throughout Friday, but short week ahead may dampen trading interest, hence sending the market into a conundrum especially with the lack of US data as well as minor moves from the Dow index overnight.

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Morning Dew - 21 May 2014

Sell On Fact

Profit taking continues to hit the JCI on Tuesday, taking down the index back below 4,900. Just a day after the contending pairs of the upcoming presidential election were announced, the index took a heavy blow as the balance of support between the two rival pairs turned to be in favor of Prabowo-Hatta. Still, the legislative portion simply cannot guarantee anything at the moment, which led the market to simply choose to cover its profit first.

A new cold war could be in place as the EU, United States and Ukraine stated that they see no withdrawal of Russian army from the Ukrainian border and that Russia are misinforming the international community over the issue. Recently, Russia claimed that Russian troops have started their withdrawal from the border.

USDIDR bounced to 11,441 from 11,351 on Tuesday.

BSDE Dividend

Real-estate developer BSDE plans to issue dividend worth Rp275.58bn or 10.24% of the total net profit in 2013, or Rp15 per share. About 89.69% or Rp2.41tn of total net profit will be allocated as retained earnings to strengthen the capital structure of the company. BSDE booked revenue of Rp5.74tn in 2013, up from Rp3.73tn in 2012. A land sale to its subsidiary worth Rp1.2tn was the major factor behind the improving performance.

Technically Speaking...

JCI crashed below 4,900, opening a way further down below.  Next support will be at 4,800 (prior key low and just above the 50-day EMA) and subsequently 4,721, another prior key low which coincides with the 100-day EMA.

Beyond the resistance at 5,063/93 the index will aim at 5,251 – the all-time high seen last year.

MACD turned lower as the sharp fall also bent the RSI, pushing it away from the overbought area. Volume however, has been declining despite the sharp selloff. 

DILD continues to seek entry while MTDL sharp drop on Tuesday took it down below the stop level as it forced the reco out with 7.32% losses.

Day Ahead

Golkar’s support to Prabowo-Hatta for the upcoming presidential election has cast some concern over the odds of easy win for Jokowi-JK. This will continue to haunt the bulls for now, giving the bears the advantage at least until the real election comes. From the US, the FOMC minutes will be the focus of the day in the New York session.

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Morning Dew - 19 May 2014

Three-Way Race?

As the presidential election comes closer, the market continues to wait for clarity surrounding who will be the running mate for Joko Widodo, the candidate from PDI-P. On the other hand, Prabowo Subianto from Gerindra is said to be partnering with Hatta Rajasa while Golkar and Partai Demokrat are still undecided but could potentially open up the third coalition.

In Ukraine, rebels have asked to join Russia in the latest development in the troubled country. The rebels have stayed away from national talk to solve the crisis. While the Russian parliament has allowed Putin to protect Russian speakers abroad, Russia will not send troops into eastern Ukraine. Instead the Russian Foreign Ministry insisted that Kiev immediately halt military action in the southeast of Ukraine.

USDIDR continues to slide as it fell to 11,415 from 11,487 on Friday.

Housing Swells, Confidence Dips

Housing starts were up 13.2% MoM in April, way above the consensus of 3.6% increase and more than the monthly pace seen in March (+2%). Building permits also jumped 8%in and same month, reversing a 1.1% decline in prior month and also better than the expected 1.3% increase.

University of Michigan confidence index dips in May as preliminary data shows. The consensus take was 84.5 but the data showed decline from 84.1 to 81.8.

Technically Speaking...

JCI finally cleared the resistance at 5k opening the next move higher to 5,063/93. 

Beyond the resistance at 5,063/93 the index will aim at 5,251 – the all-time high seen last year.

MACD turned positive already while RSI also ticked up, along with a jump in volume. 

CSAP has been added again to the pool of recommendations. This time the stock is seen heading towards  425. Risk is set below 240, and entry is set around 275-285.

DILD has been added to the pool of recommendations. The target is set at 560/570 and 660 with stop set below 440 and entry price around 480-490.

MTDL has been added to the pool of recos with target set at 450, stop below 330 and suggested entry around 345-355.

Week Ahead

Expect the fog on the political landscape to clear the upcoming week as contending pairs for presidential election are likely to be announced officially sometime next week. A three-way presidential race is likely to be the case next July.  Ukraine will remain as a thorn to market sentiment, while US calendar will be light throughout the week.

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Morning Dew - 11 May 2014

Tight-Lipped

Apparently, there wasn’t any announcement from PDI-P about who will be the running mate for Joko Widodo. Still, it is expected to be announced sometime next week. The certainty surrounding Prabowo’s running mate is also still unclear. So far, only two parties officially declared their support for PDI-P: Nasional Demokrat (Nas-Dem) and PKB (Partai Kebangkitan Bangsa).

JCI however, managed to rack up some gains as it closed the week higher at 4,989.14.

Bank Indonesia cited weak exports behind its decision to slash its GDP forecast for this year to 5.1% to 5.5%, compared to prior estimate of 5.5% to 5.9%. In the first quarter, the current account deficit was reportedly narrowed to 2.06% from 2.12% of GDP seen in the final quarter of 2013. This year, the deficit is seen to be below 3% of GDP.

USDIDR slipped to 11,563 from 11,624.

BKSL Slipped

BKSL slumped as it was related to the recent corruption case involving Rachmat Yasin. KPK has made an official from PT Bukit Jonggol Asri (BJA) as suspect involved with the case. About 65% of BJA is owned by BKSL while the rest is owned by ELTY. 

As a consequence, our BKSL reco has been stopped out with 14.05% of losses.

Technically Speaking...

JCI finished the week higher as the consolidation shifts towards 4,850-4,900 range.

Developing on the daily chart is the head-and-shoulders pattern with the neckline projected around 4,750 or just above the 50-day EMA. The left shoulder is at 4,903, the head at 4,933 and 4,916 is so far the right shoulder. Volume shows decreasing pattern from the left shoulder to the right one, adding credibility to the pattern.

JCI needs to break through the nearest resistance seen at 4,933 to negate the H&S pattern. Higher, subsequent resistances lie at 5,000 which is the psychological resistance and later the projection target at 5,063.

MACD turned higher, approaching to cross above the zero line; while the RSI also ticked up. Volume inched higher but it will need more convincing up sessions to negate the H&S pattern.

Week Ahead

There is no surprise from the announcement of the official election results, so the market will stay focused on the political landscape ahead of the July’s presidential candidate. PDI-P still hasn’t revealed the running mate for its presidential candidate, Joko Widodo. The announcement is seen sometime next week.

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Morning Dew - 8 May 2014

Waiting Mode

Indonesia’s forex reserves up slightly in April to US$105.6 billion from US$102.6 billion in March on the back of rising oil and gas exports. The reported amount would enable the country to finance between 5.9 months and 6.1 months of imports and government’s foreign debts. The international standard of the adequacy rate is of three months of imports.

The market remains in a waiting mode despite the JCI ended higher on Wednesday. Ahead of the Friday’s official announcement of the recent legislative election, investors are keen to see how the political landscape will be formed to prepare for the upcoming presidential election.

From Ukraine, Russia said that its troops have been off the Ukrainian border. Vladimir Putin urged separatists to postpone the planned referendum the create necessary conditions for dialogue between the pro-Russian separatists and the Ukrainian government.

USDIDR inched higher to 11,527 from 11,511.

Accommodation Still Needed

Fed Chairwoman Janet Yellen said that high degree of accommodation still needed even after years since recession had ended. Unemployment rate and inflation are currently short of the Fed’s goals, she said, which bolsters the need for strong stimulus.

 Yellen also said that there is no mechanical formula or timetable for when interest rate hike will occur.

Technically Speaking...

JCI broke off from its consolidation range between 4,800-4,850 and finished higher at 4,862 by the end of the Wednesday’s session.

Developing on the daily chart is the head-and-shoulders pattern with the neckline projected around 4,750 or just above the 50-day EMA. The left shoulder is at 4,903, the head at 4,933 and 4,916 is so far the right shoulder. Volume shows decreasing pattern from the left shoulder to the right one, adding credibility to the pattern.

JCI needs to break through the nearest resistance seen at 4,933 to negate the H&S pattern. Higher, subsequent resistances lie at 5,000 which is the psychological resistance and later the projection target at 5,063.

MACD turned higher, but still below the zero line; while the RSI also ticked up. 

Volume inched higher but it will need more convincing up sessions to negate the H&S pattern.

Day Ahead

PDI-P’s presidential candidate Joko Widodo said that his running mate will be announced sometime next week around May 9th 2014, plus minus one day. The official election result will be due on May 9th, which will finally bring clarity to the current political uncertainties. Ahead of Friday, the market may continue to move in a consolidation pattern. Meanwhile, Yellen’s remark should provide some cushion for the JCI.

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Morning Dew - 7 May 2014

Conundrum

Unemployment rate fell in February to 5.7%. The number translates to 7.2 million people and was better than the unemployment rate seen on August last year which was at 6.17%. Unemployment data in Indonesia are released every February and August. About 37 million people are working less than normal working hours, which includes 26.4 million of part-time workers and 10.6 million of under-employed. Agriculture sector holds 40.8 million of people employed while trade sector holds 25.8 million, followed by services which hold 18.5 million.

JCI fell slightly as investors opt to wait for more clarity in political environment. We are closing in towards the official announcement of the legislative election result last month. Overall, the market continues to monitor the political developments ahead of the May 9th official legislative election results announcement.

USDIDR is steady at 11,511.

US Trade Deficit Fell

Trade balance improved in US as March deficit fell to US$40.4b from US$41.9b. The figure was still worse than the consensus of a US$40b deficit. Still it was a slight improvement nevertheless.

Ukraine continues to flare up as clashes with separatists intensify. Casualties fell as Ukrainian military helicopter was shot down by pro-Russian separatists.

Technically Speaking...

JCI continued to gyrate around 4,800-4,850 as the consolidation continues.

Developing on the daily chart is the head-and-shoulders pattern with the neckline projected around 4,750 or just above the 50-day EMA. The left shoulder is at 4,903, the head at 4,933 and 4,916 is so far the right shoulder. Volume shows decreasing pattern from the left shoulder to the right one, adding credibility to the pattern.

JCI needs to break through the nearest resistance seen at 4,933 to negate the H&S pattern. Higher, subsequent resistances lie at 5,000 which is the psychological resistance and later the projection target at 5,063.

MACD declined, moving away from the zero line while the RSI curve continued to turn lower as the odds for deeper setback looms large.

Day Ahead

PDI-P’s presidential candidate Joko Widodo said that his running mate will be announced sometime next week around May 9th 2014, plus minus one day. The official election result will be due on May 9th, which will finally bring clarity to the current political uncertainties. Weaker Dow on Tuesday may put some pressure on Asia as well as JCI’s performance on Wednesday.

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Morning Dew - 5 May 2014

Cooling Down

Inflation cooled in April as Friday’s data showed CPI deflated by 0.02% (month-on-month) after a 0.08% gains in prior month. Last year, the CPI also fell by 0.1% (month-on-month). Year-on-year, the CPI eased to 7.25% from 7.32% seen last month.

Trade balance recorded a surplus of US$673 million in March as exports stood at US$15.21 billion and imports stood at US$14.54 billion. Last February, the surplus was at US$843.4 million. For the first 3 month of 2014, the total accumulated surplus stood at US$1.07 billion.

Manufacturing activity accelerated in April as shown by the HSBC Markit Purchasing Manager’s Index (PMI). The index ticked up from 50.1 in March to 51.1 in April. A reading above 50 marks expansion and below 50 signifies contraction.

USDIDR edged higher to 11,537 from 11,532 on Wednesday.

US Payrolls

US economy added 288k nonfarm employment in April, the best monthly gains since early 2012. February and March figures were revised up to 222k and 203k, respectively. Previously, the both were reportedly gaining 197k and 192k, respectively. Jobless rate fell sharply to 6.3% from 6.7%. The fall was caused by shrinking labor force, instead of significant increase in hiring. Consensus for both data were 215k for payrolls and 6.6% for jobless rate.

Technically Speaking...

JCI continued to gyrate around 4,800-4,850 as the consolidation continues.

Developing on the daily chart is the head-and-shoulders pattern with the neckline projected around 4,750 or just above the 50-day EMA. The left shoulder is at 4,903, the head at 4,933 and 4,916 is so far the right shoulder. Volume shows decreasing pattern from the left shoulder to the right one, adding credibility to the pattern.

JCI needs to break through the nearest resistance seen at 4,933 to negate the H&S pattern. Higher, subsequent resistances lie at 5,000 which is the psychological resistance and later the projection target at 5,063.

MACD declined, moving away from the zero line while the RSI curve continued to turn lower as the odds for deeper setback looms large.

Week Ahead

PDI-P’s presidential candidate Joko Widodo said that his running mate will be announced sometime next week around May 9th 2014, plus minus one day. The official election result will be due on May 9th, which will finally bring clarity to the current political uncertainties. Positive economic data on Friday could support the JCI during the first half of the coming week.

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April In Review

US Nonfarm Payrolls came in at 192k in March, below the consensus of 200k and lower than February’s

payrolls (+197k); unemployment rate stayed at 6.7%, compared to consensus rate which

was at 6.6%. While the data came in below consensus, it actually came within the range that suggests the U.S. labor market continues on the mend.

Uneasy Win. Based on the quick counts from several sources, the winner of the legislative election was PDI-P, followed by Golkar and Gerindra. The victory for PDI-P however, came in below the initial expectation below 20%. This has forced the party to forge coalitions with several other parties. Nasional Demokrat has been the only one officially declared its coalition with PDI-P. Other parties have continued to lobby one another, but it is likely that everyone is waiting for the official count scheduled for May 9th 2014. For the time being, the market seems to have been taken hostage by the political uncertainties regarding who will join who.

Yellen’s Second Take. After her speech took the market by surprise by saying that the Fed may rise its benchmark interest rate about six months after the tapering process ends, the Fed Chair Janet Yellen “rephrased” what lies ahead of the FOMC’s policy. Specifically, she said that the market should focus on the gap between the Fed’s goals and the actual figures of unemployment and inflation rates. Unemployment rate is now at 6.7%, higher than the Fed’s criteria of full employment of 5.2% to 5.6%. Inflation rate on the other hand, remains well below 2%, the target set by the Fed. So, somewhat the Fed has scrapped the 6.5% unemployment rate that qualifies for rising the interest rate with 5.2% to 5.6%. This means the path towards the monetary tightening is still a long way to take, giving some time for the economy to enjoy the current low-interest rate environment.

Despite Yellen’s rephrase, we are still see the tapering off of stimulus to end this year and depending on how the economic data in the first half 2015, there’s still the odds of the first rate hike by the FOMC in 2H15.

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