Conundrum
Stocks finished mixed on Monday as the JCI ended slightly down but the IDX30 and LQ-45 indexes finished slightly higher. Lack of fresh catalysts have put the investors to choose to stay on the sidelines for now.
Nickel producers continued to be under pressure by the tumbling nickel prices as the metal fell to a five-month low on the back of concern of declining demand in China. Recent comment from China’s FinMin is seen as dampening the prospects for another stimulus boost. Lou Jiwei confirmed that there won’t be major policy changes to respond to individual economic indicators. Nickel contract for 3-mos delivery fell to US$17,025 a metric ton after briefly touched US$16,924. Last May, the metal still stood at US$21,625, highest since 2012.
USDIDR slipped further to 11,972 on Monday after hitting 12,030 last Thursday. Recently, BI said that the exchange rate should be within the range of Rp11,600 to Rp11,900 against the US$ to support export growth.
SDRA, BCIC
SDRA to merge with Bank Woori Indonesia with shareholders of BWI will be able to own 55.56% of SDRA when the merge is effective. Based on the report dated 25 August 2014, the merge will produce a new commercial bank Bank Woori Saudara. An Extraordinary Shareholders Meeting is to be held on November 7th 2014 and the merge is expected to be effective on December 19th 2014.
BCIC is an acquisition target of J Trust Co. Ltd. with a deal worth Rp4.5trillion or more than three times BCIC’s book value. BCIC which was formerly Bank Century, was bailed out by the government during 2008 global financial crisis.
Technically Speaking...
Monday’s price action brought nothing new so far as the index was relatively steady at the start of the week.
The index is, once again expected to defend the recently reclaimed 5,200 resistance mark, aiming at taking back its recently won 5,251 resistance ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. On the downside, we have 5,117, which is roughly the same as the 50-day EMA curve. Should we broke below this line, more supports are seen at 5,039 and 5,000.
The MACD has continued to approach the zero line, while RSI is now approaching the overbought area again, volume seems to be steady recently. While all these are somehow good signs for the index, we should remain cautious over the risk of another setback as we approach the upper end of the expected trading range.
Day Ahead
Too early to conclude that the downside is secured. Even as the index returns above 5,200 mark, it is seen struggling to break out of the recent range between 5,100 and 5,250. While the upside prospect has somewhat brightened, the downside risk remains. The coming week will feature manufacturing sector’s performance data in September from major world economies.
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