Monthly Review - August 2014

MARKET ISSUES

The Seventh President

As Constitutional Court (MK) rejected claims from Prabowo-Hatta on the election dispute, Joko Widodo & his running mate, Jusuf Kalla are set to be the next president and vice president when they are inaugurated in October. The pair won almost 71 million votes (53.15%) against Prabowo Subianto – Hatta Rajasa’s total tally of 62.5 million votes (46.85%). Despite the win, Jokowi will face a tough start of his presidency later on when the new government will be faced with the dilemma of fuel subsidy. Now that the current government has rejected to raise the fuel price, it will be the next one who will have to pull the trigger. Jokowi insists that the subsidy should be reduced and that the spending should be redirected to other uses such as to promote education, health and infrastructure projects.

Growth Slowed

The economy has slowed in the second quarter 2014. GDP growth slowed to 5.12% from 5.21% (1Q14), while the trade balance has swung back to deficit. In June, the balance was recorded at US$300 million of deficit, bringing the first six months trade balance to a deficit of US$1.16b. Inflation was muted however, as the statistical impact of CPI spike due to fuel price hike has waned. As there is no imminent threat on the inflation side and no significant slowdown of GDP growth, Bank Indonesia has decided to stay put and kept rates unchanged.

MBSS Saga

MBSS was sent to the suspension bin in mid-August when Great Dyke brought the company to the PKPU regarding an unsettled debt worth US$2,932,635. The matter was solved after MBSS paid the debt on August 15th. The amount paid has no significant impact on the company’s financial as its cash position was very much adequate to settle the debt. Trading suspension was later revoked.

Cement Sales Down, HBA Fell Again

Cement sales fell in July as Idul Fitri holiday dent construction activities. Sales are expected to recover in subsequent months. ASI’s forecast stays between 4% to 5% growth in sales in 2014. Elsewhere, HBA fell for another 2.98% to US$70.29 per ton from US$72.45 per ton (July). According to Ministry of Energy and Mineral Resources, coal production is likely to be capped at 425 million ton per year.

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Morning Dew - 29 August 2014

Stumbling Block

The incoming president Jokowi is likely to start off his term with one unpopular decision: to raise the fuel price. The move is deemed important to reduce the heavy burden that the government has to bear which has led to scarcity of fuel recently. While distribution has been normalized, under a tight supply of fuel there is no guarantee that such thing will happen again.

According to Jokowi, he had asked the current president, SBY to reduce the burden by raising the fuel price earlier before the new government starts to rule, but this request was said to have been rejected. A reduced subsidy on fuel is expected to open up possibilities to channel government spending on other needs such as infrastructure, healthcare and education.

Amidst all that, JCI attempted once more on Thursday to take on the resistance at 5,200 mark, but still with no success in settling the daily closing price above it.

Elsewhere in the U.S., hackers were reportedly managed to hack into JP Morgan Chase’s computer system.

USDIDR was down at 11,682 on Thursday compared to Wednesday’s settlement at 11,708.

BJBR, U.S. GDP

Pefindo has revised BJBR’s rating prospect to negative from stable. The weakening of the asset quality and company’s profitability indicators have been the factors behind the revision.

From the U.S., the 2nd quarter GDP was reportedly up by 4.2% (yoy) vs. 4.0% initially reported. Upward revisions hinged on business spending and exports. Meanwhile, U.S. jobless claims were down 1k to 298k last week. 

Technically Speaking...

JCI continues to struggle to break through the 5,200 barrier as the index launched another attack on Thursday.  No clean break so far however, as the day ended at 5,184.48.

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has swung back to negative area whilst RSI has pop up above the 70% mark.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Fuel price has become a new catalyst which can put a dent on the JCI’s chance to rally in the short-term, but on the long-run it could have somewhat a more positive impact on the index. Other than fuel price, the cabinet composition to work under Jokowi’s leadership will be also another wildcard for market mood in the near-term. Better-than-expected US GDP for 2Q14 should also lend support to the market mood.

Click here to download the full update (PDF)

Morning Dew - 26 August 2014

Slow Start

A quiet start of the week, the JCI drifted lower to end at 5,184.96. Lack of immediate catalysts have triggered more profit taking among investors.

The market currently awaits for the naming of ministers in the Jokowi-JK’s cabinet following the Constitutional Court’s dismissal of election results’ challenge brought in by Prabowo-Hatta’s side. More politics are seen in the mix during the process of lining up the ministers, but whether Jokowi’s final lineup will truly impress the market or not will remain to be seen.

On the international front, the geopolitical tensions in the Middle East and Ukraine remain a drag for market sentiment, as well as the recent statement from the FOMC minutes that the end of low interest rates environment is to come sooner rather than later as employment outlook continues to improve.

USDIDR was back up at 11,714 on Monday compared to Friday’s settlement at 11,654.

MDLN, CPGT

A big chunk of land in MDLN’s Cikande area of about 110ha was reportedly bought by a Thai beverage company. The buyout also include an option to buy another 190ha in 2015 and 2016. The deal is expected to fulfill MDLN’s industrial land sales target of 100ha per year for the next two years.

CPGT through its recent RUPSLB has decided to revamped the entire BOD and Commissioners following a fraud investment case involving former management. In a move viewed as a hostile takeover, the shareholders rejected the company’s financial report for 2013, leading to more drama to unfold.

Technically Speaking...

JCI drifted lower below 5,200. Still, the index is just within spitting distance to reclaim its all-time high at 5,251. 

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the recent lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD continued to tick up into the positive area whilst RSI has started to stall around the overbought area.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Beyond the Court is the naming of the ministers, the first test for Jokowi-JK’s commitment to form a strong but non-transactional government. Recent Federal Reserve Minutes should provide support for the market as the central bank has further started to prepare the market for the first rate rise after the Fed’s easy money policy era.

Click here to download the full update (PDF)

Morning Dew - 25 August 2014

Taking A Breather

JCI took a breather on Friday as the advance stalled around 5.2k following the final verdict from Constitutional Court which put an end to the election dispute.

As noted some time ago, the next after the Court’s verdict will be the forming of the new cabinet. Who will be appointed as ministers will be the first test for Jokowi-JK’s commitment over a professional, rather than transactional cabinet composition.

Elsewhere, despite recent comment from Janet Yellen that slack remains in the labor market even after recent improvements and economic recovery, the recent 

Federal Reserve Minutes of their last FOMC meeting showed that the central bank has raised the odds that stimulus will end sooner than anticipated.

USDIDR was down at 11,654 on Friday compared to Thursday’s settlement at 11,717.

BUMI, MAGP

BUMI’s bondholders have agreed the key terms for proposed restructuring  of $375 million convertible bonds due in August. According to the director Dileep Srivastava, more than 98% of the bondholders are in favor of the terms.

MAGP reported a net sales worth Rp72,298.10 million in 1H14 vs Rp19,262.28 million (1H13), but its net profit showed a loss of Rp11,362.54 million vs. a profit of Rp3,192.56 million (1H13). EPS fell sharply from Rp0.19 per share to Rp-18.74.

Technically Speaking...

JCI continued seesaw around 5,200, but fell short of closing above it. Still, the index is just within spitting distance to reclaim its all-time high at 5,251. 

As for now, JCI is aiming to secure its ground abot 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the recent lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD continued to tick up into the positive area whilst RSI has started to stall around the overbought area.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Week Ahead

Beyond the Court is the naming of the ministers, the first test for Jokowi-JK’s commitment to form a strong but non-transactional government. Recent Federal Reserve Minutes should provide support for the market as the central bank has further started to prepare the market for the first rate rise after the Fed’s easy money policy era.

Click here to download the full update (PDF)

Morning Dew - 22 August 2014

Final Verdict

The Constitutional Court has rejected all lawsuits brought on by Prabowo-Hatta on the election dispute saga, hence effectively ended the legal path for Prabowo to negate the KPU’s decision to declare Jokowi-JK as the winner of the 2014 presidential election.

While dissatisfaction has been expressed by the Prabowo-Hatta’s side after the Court’s verdict, Prabowo’s supporting parties stated that they remain committed to stay within the coalition and said that the coalition may be taking further legal steps and continuing its political efforts. No details were explained over what kind of steps or efforts were meant.

Recent Federal Reserve Minutes of their last FOMC meeting showed that the central bank has raised the odds that stimulus will end sooner than anticipated.

USDIDR was marginally higher at 11,717 on Thursday compared to Wednesday’s settlement at 11,707.

Supports from Data

China HSBC Manufacturing PMI ticked down in August to 50.3, worse than the expected 51.5 and lower than  July’s  51.7.

US Manufacturing PMI for August beat the consensus and stood at 58.0 against 55.8 seen in July. Consensus forecast was at 55.7.

US Existing Home Sales were up 2.4% in July (MoM), defying consensus forecast of a 0.5% drop..

Philadelphia Fed Index was higher at 28.0 in August vs. 23.9 seen in July.

Technically Speaking...

JCI pushed higher on Thursday as the index broke the 5,200 barrier, just within spitting distance to reclaim its all-time high at 5,251. 

As for now, focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the recent lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD continued to tick up into the positive area whilst RSI has started to inch higher towards the overbought area while volume slipped slightly on Thursday.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. 

Day Ahead

Constitutional Court has cast its verdict over the election dispute and thus clears the fog of uncertainties surrounding the political atmosphere. The verdict should be market-friendly and may become the catalyst for the index to rise higher. Solid string of data from the U.S. is also seen lifting up market sentiment on Friday.

Click here to download the full update (PDF)

Morning Dew - 20 August 2014

Taking A Pause

JCI continued to take a pause around the resistance at 5,165 as the verdict from MK is expected tomorrow. 

Lack of key issues or data have left the Constitutional Court’s decision this week as the major factor to shape the market’s sentiment. Most market participants have been betting that Prabowo-Hatta may fail at the MK stage and that Joko Widodo is likely to be the winner of the last election. 

Another factor to be considered by investors is the Fed Minutes of the most recent FOMC meeting which would reveal or at least, hint on how soon the Fed will raise rates after the stimulus program ends sometime in the fourth quarter.

USDIDR was marginally higher at 11,682 on Tuesday compared to Monday’s settlement at 11,681.

US Inflation Update

US Core CPI was up 1.9% (YoY) in July, unchanged from June. The month-on-month figure was also steady at 0.1%.

Headline inflation slowed to 2% from 2.1% (YoY) and 0.1% from 0.3% (MoM).

Timid inflation may provide a case for the Fed to maintain its easy monetary policy for now, giving a boost for US stocks to rise on Tuesday.

Meanwhile, housing starts were robust in July as construction jumped 15.7% from a month earlier.

Technically Speaking...

JCI continued to consolidate its gains near 5,165 resistance while briefly hit 5,178 on Tuesday.

As 5,165’s role as resistance has been continuously eroded,  focus now turns to subsequent resistance at 5,251, the all-time record high.

Near-term supports are seen at 5,135, the recent lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD continued to tick up into the positive area whilst RSI seesaw near the overbought area and volume also gained on Tuesday.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Repeat: MBSS has been unsuspended and trading returns to normal.

Day Ahead

Lack of catalysts have pushed the index towards a listless trade on the start of the week. The end of election dispute is expected in midweek and the odds favor the election result to remain unchanged. In such case, we may move on to the next issue: the cabinet. Elsewhere, global investors may set their sights on the release of Fed Minutes of the recent FOMC meeting.

Click here to download the full update (PDF)

Morning Dew - 18 August 2014

CAD Expanded

Current account deficit (CAD) has expanded in the 2Q14 to US$9.1billion or 4.27% of GDP. In prior quarter the CAD was at 2.05% of GDP while compared to the same quarter a year earlier it was at 4.47% of GDP. 

For the next two quarters, the BI Governor expects CAD to fall as exports of mineral-ore to resume after some large miners have struck an agreement with the government. For 2014, CAD is expected to be around 3% of GDP or around US$27bn, which is lower than US$29bn (3.3% of GDP) seen last year.

JCI ended down on Friday as profit taking continued, sending the index to finish 6.5 points lower or 0.1% below Thursday’s close.

USDIDR inched higher and finished Friday’s session at 11,693 per US$ from 11,667 per US$ on Thursday.

MBSS Press Release

Concerning the recent suspension of MBSS, the matter has been solved as Great Dyke has withdrawn the case from PKPU after the amount claimed has been paid on August 15th. The payment worth US$2,932,635.

According to MBSS, there is no crucial impact on the company over the case settlement, and as the case has been settled, the suspension on the stock should be revoked early next week.

Technically Speaking...

JCI broke through the 5,165 resistance last week, but failed to hold on to its gains as the index slipped back below 5,165.

Near-term, 5,165 is still considered as resistance, although its significance has been reduced. Subsequent resistance lies at 5,251, the all-time record high.

Near-term supports are seen at 5,165, the recent key resistance turned support, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has ticked up into the positive area after a string of declines into the negative area.  RSI has turned lower again after several failed attempts to move higher while volume also inched lower on Friday.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Week Ahead

Indonesian political drama is supposedly set for a closing finale as MK will deliver its decision on midweek. It is expected that there will be no change in the election result, while on the least likely scenario is the repeat of the election. If election dispute is to be settled once and for all next week, the next attraction point will be who will sit in the cabinet.

Click here to download the full update (PDF)

Morning Dew - 15 August 2014

BI Rates Steady

Bank Indonesia decided to maintain rates steady on its regular meeting on Thursday. The lending facility and deposit facility rates are maintained at 7.5% and 5.75%, respectively while BI rate stays at 7.5%.

The BI’s decision is aimed at directing the inflation towards target at 4.5% plus/minus 1% in 2014 and 4.0% plus/minus 1% in 2015.

For economic growth, BI expects the economic growth in 2014 will  tend to move towards the lower-end of BI’s forecast which is between 5.1% and 5.5%.

JCI ended down on Thursday amidst wave of profit taking, sending the index to finish 12.72 points lower or 0.25% below Wednesday’s close.

USDIDR slipped and finished Thursday’s session at 11,667 per US$ from 11,683 per US$ on Wednesday.

BRAU Downgraded

BRAU’s rating has been downgraded buy Moody’s from B2 to B1. Several factors cited for the downgrade: continued decline of prices of thermal coal has put pressure on the company’s revenues and cash flow along with increasing risk on the refinancing of senior bonds worth US$450 million which is due within less than 12 months.

Technically Speaking...

JCI broke through the 5,165 resistance but failed to hold on to its gains as the index slipped back below 5,165.

Near-term, 5,165 is still considered as resistance, although its significance has been reduced. Subsequent resistance lies at 5,251, the all-time record high.

Near-term supports are seen at 5,165, the recent key resistance turned support, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has ticked up into the positive area after a string of declines into the negative area.  RSI has flattened after recent bounce and volume also inched higher on Monday, however.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

BI held rates steady, and no surprises from the central bank’s statements. For now, as the upper consolidation band has been broken, the upside potential seems to be in favor of putting the index on track of hitting its all-time high at 5,251. Still, Thursday’s setback is seen as corrective while upside potential remains.

Click here to download the full update (PDF)

Morning Dew - 13 August 2014

HBA Slipped in August

JCI added another 0.37% to Monday’s gains as investors remain upbeat amidst lack of catalysts.

Harga Batubara Acuan (HBA) fell again in August. According to the Ministry of Energy and Mineral Resources, the HBA slipped 2.98% to US$70.29 per ton from US$72.45 per ton seen in July. Against last year’s price, HBA for August also fell 8.36%. The slump in coal prices has made coal miners struggling for survival, especially the smaller ones.

The Ministry of Energy and Mineral Resources also said that coal production is likely to be capped at 425 million ton per year in an effort to prevent overproduction of coal. Alternatively, the Ministry also ponders two other scenarios. One is to cap annual production growth to 1% while assuming local consumption to increase 8% annually and no rise in reserves. Second scenario is to cap production to 425 million ton per year with local consumption assumed to be growing at 8% annually while coal reserves assumed to rise 1% per year.

USDIDR slipped to end at 11,677 per US$ from 11,728 per US$ on Tuesday.

Not BI’s Mandate

As Bank Indonesia meeting closing in, the central bank governor Agus Martowardjojo hinted that the economic growth is not BI’s mandate; So, recent GDP slowdown in 2Q14 will not push BI to loosen up the interest rate.

On the contrary, BI governor said that BI will continue to monitor the exchange rate volatility to maintain currency stability.

Technically Speaking...

JCI added another 0.37% of gains, gaining to end above 5,100 mark.

Current resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has ticked up after a string of declines but still within the negative area. RSI has flattened after recent bounce and volume also inched higher on Monday, however.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Bank Indonesia meeting on Thursday will grab the market’s attention. At least the market will proceed cautiously ahead of the meeting. For now, conundrums may stay in force as no significant issues around, the index is seen confined within its consolidation range. Strong gains on Monday then Tuesday, may spark correction but downside remains secure.

Click here to download the full update (PDF)

Morning Dew - 12 August 2014

Cement Sales Down

JCI started the week on a solid footing as it closed at 5,113.24 or up 59.48 points or 1.18% higher than Friday’s close. Most sectors were up, except the agriculture and mining sectors.

The case over election dispute remains in progress, but lack of strong proofs may hand Prabowo-Hatta’s side the MK’s dismissal, and the market seems to be factoring in this issue.

Cement sales fell 25% in July 2014 from 5 million tons (July 2013) to 3.7 million tons. Economic slowdown as well as Idul Fitri holiday were cited as behind the decline. After the holiday-packed month, sales are expected to recover in the coming months. For the entire 2014 the ASI (Asosiasi Semen Indonesia) forecast sales to grow between 4% to 5%.

China data released on Saturday showed inflation was steady at 2.3% in July (YoY) while PPI (or inflation at the production stage) declined 0.9% in July (YoY) after a 1.1% decline a month earlier. Timid inflation in China is seen accommodative to the Chinese economy.

USDIDR slipped to end at 11,728 per US$ from 11,822 per US$ on Monday.

Corporate News: JECC & SMSM

Cable manufacturer JECC booked a 24.63% increase of revenue within the first six months this year (Rp763.91b) against the same period last year (Rp612.91b).

Auto components producer SMSM’s revenues were up to Rp1.29t, or rising 18.68% from Rp1.09t seen last year during the same period. By June, overseas markets contributed 67.74% from total revenues or up 36.79% from last year. Local markets contributed Rp416.59b or 32.26% of total revenues.

Technically Speaking...

JCI is off to a fine start this week, gaining 1.2% to end above 5,100, but it remains within its consolidation range between 5,000 and 5,165.

Current resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has ticked up after a string of declines but still within the negative area. RSI has flattened after recent bounce and volume also inched higher on Monday, however.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Election dispute, geopolitics, and recent slew of poor economic data are seen putting a drag on the index, although improving forex reserves seemed to help a bit. With no significant issues around, the index is seen confined within its consolidation range. Strong gains on Monday may spark correction but downside remains secure while the upside potential is maintained.

Click here to download the full update (PDF)

Morning Dew - 11 August 2014

Forex Reserves Up

JCI slipped on Friday as consolidation continued to strain the index within the range of 5,000 to 5,165. Recent poor macro data have capped the index from moving past 5,165 while investors remain cautious over the disputed election result. Still, it is expected that there won’t be any changes in the recent presidential election result.

Foreign exchange reserves were up at the end of July 2014 to US$110.5 billion, from US$107.7 billion a month earlier. Receipts from Eurobonds issued by the Indonesian government and earnings from oil and gas exports as well as rising foreign capital inflows were the prime factors behind the gains in reserves.

At such level, the forex reserves can cover 6.4 months of imports or 6.2 months of imports while servicing government’s external debt repayment. International standard of reserves adequacy is at three months of imports.

USDIDR inched higher to end at 11,822 per US$ from 11,766 per US$ on Friday.

Global Data

China trade balance improved in July as surplus grew to US$47.3 billion from US$31.56 billion. Initially, the consensus forecast the surplus to have shrunk to US$26 billion.

China’s exports soared by 14.5% from 7.2% a month earlier while imports actually fell 1.6% vs a 2.6% increase forecast earlier.

From the U.S. the nonfarm productivity for 2Q14 was up by 2.5% vs. 1.6% expected. In previous quarter the productivity weas down 4.5%.

Technically Speaking...

JCI fell on Friday as the index returned to consolidation mode.

Current resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has now crossed the zero line and returned to negative, while RSI has bounced somewhat after slipping away for the last few sessions. Volume was stable, however.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Week Ahead

Election dispute, geopolitics, and recent slew of poor economic data are seen putting a drag on the index. With no significant issues around, the index is seen moving back within its consolidation range. Solid gains of DJIA on Friday may help support the JCI at the start of the coming week.

Click here to download the full update (PDF)

Morning Dew - 8 August 2014

Rates Steady In Europe

JCI bounced on Thursday after being put under pressure earlier. The market sentiment continues to be overshadowed by the recent poor macro data from the domestic side aside from several geopolitical flashpoints abroad.

Recently, a string of data showed that economic growth has slowed in 2Q14, while trade balance swung back into the red. Inflation however, remains contained while consumer confidence was up slightly.

On the political side, the dispute over election result continues on the MK stage, bringing a delay on the finalization of the election result. Still, it is highly unlikely that the result will change.

USDIDR inched higher to end at 11,766 per US$ from 11,756 per US$ on Thursday.

Global Data

Jobless claims was down to 289k from 303k a week earlier, better than the consensus take of 304k. 

In Europe, both Bank of England and European Central Bank have decided to hold the interest rates steady at 0.5% and 0.15%, respectively.

The next big thing on the overseas macro front will be the release of China trade balance next Friday. July trade balance is seen down to US$26b from US$31.56b even on the back of accelerating exports (7.5% from 7.2%) and slowing imports (3% from 5.5%).

Technically Speaking...

JCI bounced on Thursday after being put under pressure earlier. The index briefly touched the low of 5,043.52 but ended higher at 5,067, back above its support at 5,050.

Current resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has now crossed the zero line and returned to negative, while RSI has bounced somewhat after slipping away for the last few sessions. Volume was stable, however.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Election appeal to the Court, the next cabinet and the tremor from recent slew of economic data such as inflation, GDP and trade deficit will remain as catalysts in the play, but with diminishing effect. US stock indexes were back in the red overnight and this could put some pressure on the index on Friday. 

Click here to download the full update (PDF)

Morning Dew - 7 August 2014

Hit by Macro

JCI continued to fall on Wednesday after a slew of economic data released earlier this week showed the economy slowed down in 2Q14 while trade balance swung back into red.

Consumer confidence index was higher in July, up from 116.3 a month earlier to 119.8, according to a survey conducted by Bank Indonesia. In addition, the survey indicates that inflation pressure will lessen in the next three months as well as within the next six months. The main driver of the timid inflationary pressure is expected to be more evident in the clothing and food categories.

The first court session commenced on Wednesday over the election dispute. Despite the drama, it is likely that the election result from KPU will not change and that Jokowi-JK will be the next President-VP for 2014-2019.

USDIDR inched higher to end at 11,756 per US$ from 11,733 per US$ on Wednesday.

Global Data

Jobless claims are set to be released on Thursday, with the consensus sees the weekly claims were up 2k from 302k a week earlier.

The next big thing on the overseas macro front will be the release of China trade balance next Friday. July trade balance is seen down to US$26b from US$31.56b even on the back of accelerating exports (7.5% from 7.2%) and slowing imports (3% from 5.5%).

Technically Speaking...

JCI slipped below the 5,100 mark on Wednesday as the index seems to be once more caught in a consolidation mode between 5,165 and 5,050.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has now crossed the zero line and returned to negative, while RSI has also continued to slip below the overbought area despite declining volume.

ADRO, SMRA and WSKT recos are still awaiting their entry prices to be filled. Please check the details on the table below.

Day Ahead

Election appeal to the Court, the next cabinet and the tremor from recent slew of economic data such as inflation, GDP and trade deficit will remain as catalysts in the play. US stock indexes were stable overnight and this should lessen the pressure expected on Thursday. 

Click here to download the full update (PDF)

Morning Dew - 6 August 2014

Economy Slowed, Return to Deficit

JCI was knocked by economic data, bringing the index down 0.2% or 10.16 points to 5,109.09 after briefly pierced the 5,100 mark.

GDP data showed that 2Q14 saw economy grew by 5.12% (YoY), slower than 1Q14 (+5.21%). Quarter-to-quarter, the GDP expanded by 2.47% while during the first half GDP showed growth by 5.17% (YoY).

Trade balance swung into deficit in June as exports amounted to US$15.42bn whilst imports amounted to US$15.72bn.  Hence, the balance swung back to a deficit of US$0.30bn.

Earlier yesterday, July CPI was reportedly at 0.93% (MoM) while Jan-July inflation reached 2.94% and year-on-year CPI was at 4.53%. Core CPI was up 0.52% (MoM), while year-on-year core CPI reached 4.64%. For the first seven months, inflation was at 2.4%.

USDIDR ticked down to end at 11,733 per US$ from 11,747 per US$ on Tuesday.

Global Data

China Manufacturing PMI slowed to 54.2 in July vs 55.0 in June, for service sector the index fell to 50.0 from 53.1 while the composite index fell to 51.6 from 52.4.

From the U.S., the Markit US Services PMI fell to 60.8 in July from 61.0 a month earlier while the ISM for non manufacturing composite ticked up to 58.7 from 56.0.

U.S. factory orders went up by 1.1% in June after a 0.6% decline in May.

Technically Speaking...

JCI held steady above the 5,100 mark on Tuesday after it started the week on a solid footing.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD ticked down heading towards the zero line, while RSI has continued to slip below the overbought area accompanied by declining volume.

SMRA and WSKT recos are still awaiting their entry prices to be filled, in addition ADRO has been added in queue. Please check the details on the table below.

Day Ahead

Election appeal to the Court, the next cabinet and the tremor from recent slew of economic data such as inflation, GDP and trade deficit will be the catalysts in the play. Steep fall in the US stocks will put pressure on the already under-pressure JCI. Later this week, the US nonfarm payrolls will once again sap the market attention.

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Morning Dew - 5 August 2014

Fresh Start

JCI was off to a fine start after a week-long holiday. The index jumped 0.6% to end the day above the 5,100 mark.

We now have passed the election as well as the corporate financial reports for the first half of 2014. The market is still digesting the numbers on the reports while also waiting for the MK to deliver its decision to eventually end the dispute between two rival presidential candidates later this month.

U.S. stocks have also found its footing after having pummeled throughout last week with the S&P tumbled 2.7% amidst the default of Argentina and the fall of Banco Espirito Santo.

USDIDR jumped to end at 11,747 per US$ from 11,591 per US$ on Monday.

Spirited Away

As mentioned in our monthly review,  the Fed has stayed on course to remove the bond-purchasing program entirely by October. In its recent FOMC meeting the central bank has reduced the bond buying amount to US$25bn.

Portugal’s central bank has decided to bail out the troubled Banco Espirito Santo with the bailout value of 4.9 billion euros. The troubled bank has hurt global sentiment last week along with the S&P’s announcement of Argentina’s default.

Technically Speaking...

JCI bounced off its support at 5,050 on Monday to start the week on a solid footing as the index finished the day up by 0.6% at 5,119.25.

The next resistance lies at 5,165, the recent intraday high. Beyond this the index will aim at 5,251 – the all-time high seen last year.

Near-term supports are seen at 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD stable near the zero line after several consecutive downticks, while RSI has started to slip below the overbought area accompanied by declining volume.

ADHI has found its entry price at 3,070 and now the reco is open with target at 4,000 and stop level below 2,800.

SMRA and WSKT recos are still awaiting their entry prices to be filled, in addition ADRO has been added in queue. Please check the details on the table below.

Day Ahead

Politics will still play its key role in shaping the market sentiment this week. While most people seemed to have abandoned the scenario that Prabowo-Hatta will win the case at the MK stage, we cannot ignore such risk, albeit minimal. Also, candidates to fill in the ministers’ post in Jokowi-JK’s cabinet are the potential next attraction points for investors. Later this week, the US nonfarm payrolls will once again sap the market attention.

Click here to download the full update (PDF)