Morning Dew - 12 November 2014

Fighting Back

JCI struck back as the index climbed its way above 5k. Several positive catalysts involved were political reconciliation between political elites and optimism over the economy after the President’s presence in the APEC summit reinforced beliefs that Indonesia will become a more important key player in the regional economy under Jokowi’s tenure.

Upside is expected to remain capped by the government’s plan to cut fuel subsidy however, as this will naturally push the inflation up, somewhat similar to last year’s fuel price hike.

Rising inflationary pressure may push Bank Indonesia (BI) which is set to meet on Thursday for regular meeting to raise rates as well if the risk of inflation endangers the central bank’s inflation target for this year (at 4.5% plus or minus 1%)

USDIDR gained on Tuesday, ended the day at 12,163 from 12,138 seen on Monday.

ITMG, TAXI, INCO

ITMG recorded net sales of US$1.48bn in 9M14, down from US$1.63bn in 9M13. Net profit however, up to US$168.85 million compared to US$155.86 million.

TAXI’s revenues gained 26% in 9M14 from Rp506.29bn to Rp640.15bn. Net profit grew 15% to Rp109.25bn.

INCO will distribute interim dividend for FY2014 worth US$0.01007 per share. The date is set for Dec 17th 2014 for shareholders listed by 3 Dec 2014.

Technically Speaking...

JCI bounced on Tuesday as the index found its way back above 5k. The rebound however, may open a way back to return to the highs of 5,200s.

However, should the index fails to follow through the gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still below zero after recent decline, RSI curled up a bit after being taken back to the neutral area.

For Wednesday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Tuesday’s rally will need more convincing push to the upside or risk slipping back below 5k. Technical outlook improved a bit, but remains cloudy.

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