China Connection
JCI slipped again, settling the day at 5,122 as waves of profit-taking continue.
Global fundamentals have stepped under the highlights on Tuesday, with China took the first turn.
China’s bonds rated below AAA or sold by issuers graded lower than AA are no longer allowed to be used as collateral for short-term loans obtained through repurchase agreements. The decision has sparked turmoil in Chinese shares as investors reassessed their portfolios related to such rated bonds.
In Europe, the ghost of past Greek crisis has returned as the government decided to fast forward a parliamentary vote on a new head of state. If the ruling PM Antonis Samaras cannot win supports from his political opponents, the vote is likely to be won by the anti-austerity party Syriza. Such win will put a major risk to the country currently undergoing the European bailout program to revive its economy.
USDIDR barely changed on Tuesday, only inching lower from 12,352 to 12,347.
Indonesia CPO
Exports are expected to increase to 21.6 million tons in 2015 while production may reach 32.5 million tons. Price of the commodity is expected to be between US$740-800 per ton. Assuming that the current zero export tariff scheme for CPO exports is maintained by the government, acceleration in exports is to be expected.
In October, exports reached 2.47 million tons, bringing the total of exports to 17.53 million tons. Average CPO price of these exports were at $864.24 per ton. Top markets for Indonesia’s CPO are USA, India, China, Eurozone, Bangladesh and Pakistan.
Technically Speaking...
JCI’s bid to break through its record high may have to wait for a while as the index is seen retreating to around its support at 5,100.
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.
We have seen a test of 5,200 resistance, but successful breakout remains elusive.
Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262.
MACD continues to tick lower approaching the zero line while RSI has taken a sharper turn lower off its overbought area and back to the neutral zone.
Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.
Day Ahead
JCI looks soft on Wednesday as China and Greece may weigh on the investors’ sentiment. European and American stocks have been hit by these catalysts and ended lower. Despite no direct relations to China and Greece, JCI may weaken alongside with the slump in the global sentiment. Expect the JCI to trade between 5,100-5,150 on Wednesday.
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