Morning Dew - 25 November 2014

On the Right Foot

JCI opened the week on the right foot as it resumed its rally on Monday, climbing to as high as 5,157 before settling at 5,141 at the end of the day.

Earlier gains this week was triggered by monetary policy in China and Europe where rates were reduced in China while the ECB pledged to provide stimulus in a bid to trigger inflation in Europe. The moves were in contrast with the ones we’ve seen in Indonesia (higher rates to keep inflation at bay) and in the United States (the end of QE and possible higher rates in 2015).

Exports of CPO and its derivatives climbed 45.8% in October 2014 from prior month to 2.47 million mt as export tariff helped boost trades. October tariff was scrapped as September’s CPO prices came in below US$750 per mt. With November price benchmark set at US$665 per mt, the odds is that tariff will remain scrapped, possibly through the end of this year.

USDIDR was lower on Monday, down to 12,122 from 12,161.

AISA, BWPT, BTEL

AISA: Net sales were up 24.4% year-on-year in 9M14 to Rp3.66tn (vs. Rp2.94tn [9M13]); net profits for the period were up from Rp250.6bn to Rp283.57bn.

BWPT: Decision to conduct rights issue by the company has been put on hold as the OJK has yet to give its permission. According to the company, the permission is expected to be obtained on Tuesday at the latest.

SIPD: Plan to conduct reverse stock split has been put on hold as the Extraordinary General Shareholders’ Meeting failed to reach quorum. 

BTEL: Debt restructuring proposal has been offered to the creditors which involves cash payment as well as debt-to-equity swap scheme.

Technically Speaking...

JCI continued to move higher on Monday as the new week kicked off nicely.

However, should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.

Need to see if the index can maintain its position above 5,150. If it can, a clean and decisive break beyond the 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up a bit more after Friday’s turnaround, while RSI inched higher a bit but still around the neutral zone.

Tuesday, expect the trading range between 5,000-5,250 to be maintained but with upside bias as the index is expected to continue its consolidation.

Day Ahead

Rates euphoria fades in Europe and U.S., as the market took a pause after recent gains. The closest thing will be the release of US nonfarm payrolls in the first Friday in December. For JCI, the fading euphoria will put a strain on the index’s bid to break through its historical peak. Still, the odds of doing that remains open as the index is expected to maintain its position above 5k on the back of the optimism over the realizations of Jokowi’s government programs.

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