Morning Dew -1 July 2014

A Good Start

JCI started the new week on a firm footing, sparking a new hope that the current doldrums is about to finish.

With just less than two weeks, the presidential election will become the key theme in July. The more market friendly Jokowi-JK remains as favorite despite the pair’s electability has been declining recently. It’s going to be a close call this time.

Tuesday will see trade balance data and inflation set for release.

The coming week will also feature the nonfarm payrolls data for June, which is expected to fall from 217k to 210k. Unemployment rate which is also set for release next Friday is expected to stay at 6.3% in June.

USDIDR fell sharply to 11,969 per US$, against the prior closing rate of 12,103 per US$.

Data Ahead

Trade balance data for May is expected to show a surplus of US$15 billion against the prior period which showed a deficit of US$1.96 billion.

June inflation is also seen faster at 9% (YoY) compared to 7.32% seen in May, while the month-on-month inflation is also gaining pace from 0.16% to 0.56% in June.

Manufacturing PMI is expected to show an uptick to 52.4 in June from 51.21 in prior month.

All the above data is set for release next Tuesday.

Technically Speaking...

JCI off to a fine start on Monday, but still confined within its consolidation range between 4,775-4,909 . The price pops above the 50-day EMA, but need more evidence to convince that the downside is over.

The next resistance lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD inched slightly higher but still below the zero line while RSI has continued to seesaw near the neutral zone. Volume jumped above Friday’s level.

Day  Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. USDIDR remains weak as BI seems to be tolerating the current weakness. Several key data are set for release on Tuesday, but all eyes will be focusing on the election instead.

Click here to download the full update (PDF)

Morning Dew - 30 June 2014

Stuck In A Rut

JCI caught in another setback on Friday as the index continues to get stuck in a rut within a familiar range.

With just less than two weeks, the presidential election will become the key theme in July. The more market friendly Jokowi-JK remains as favorite despite the pair’s electability has been declining recently. It’s going to be a close call this time.

Elsewhere in the U.S., the index of consumer confidence from the University of Michigan has ticked up in June from 81.2 to 82.5, slightly better than the consensus of 82.0. 

The coming week will also feature the nonfarm payrolls data for June, which is expected to fall from 217k to 210k. Unemployment rate which is also set for release next Friday is expected to stay at 6.3% in June.

USDIDR remains on the ascend as the pair reached 12,103 per US$, up from 12,091 per US$.

Data Ahead

Trade balance data for May is expected to show a surplus of US$15 billion against the prior period which showed a deficit of US$1.96 billion.

June inflation is also seen faster at 9% (YoY) compared to 7.32% seen in May, while the month-on-month inflation is also gaining pace from 0.16% to 0.56% in June.

Manufacturing PMI is expected to show an uptick to 52.4 in June from 51.21 in prior month.

All the above data is set for release next Tuesday.

Technically Speaking...

JCI continued to fluctuate within its consolidation range between 4,775-4,909 after being knocked on Wednesday.

Prior 50-day EMA has turned into resistance at 4,870 while the next one lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD inched slightly higher but still below the zero line while RSI has continued to seesaw near the neutral zone. Volume slipped a bit.

Week Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. USDIDR remains weak as BI seems to be tolerating the current weakness. Several key data are set for release on Tuesday, but all eyes will be focusing on the election instead.

Click here to download the full update (PDF)

Morning Dew - 27 June 2014

Fed Funds Rate Up in March?

JCI rebounded on Thursday after it slumped a day earlier. The index has been moving within a narrow range so far as there has been a lack of significant catalysts to push it up or down.

The most highlighted comment for Thursday would be the one coming from James Bullard. The St. Louis Federal Reserve Bank president said that rates could rise as soon as March next year. This would be much sooner than most investors are currently expecting. PR expects Fed Funds rate to be raised around mid-2015, about six months after the Fed finished its tapering.

Earlier this month, Janet Yellen said that the Fed’s monetary policy along with rising property and equity prices as well as better global economy would lead to above-trend growth. She downplayed concerns over asset-price bubbles and inflation, which was translated and summarized as: no need to rush to raise the rates.

USDIDR continued to push higher beyond the 12k mark to 12,091 on Thursday, up from 12,027 a day earlier.

US Jobless Claims

US jobless claims ticked down from 314k to 312k in the week ended June 21st. Market had expected claims to have fallen to 311k.

Personal Consumption Expenditure (PCE), one of the Fed’s key variables for setting its rate policy has gained 1.5% YoY in May, slightly faster than 1.4% gains seen in April. The core PCE also gained 0.2% MoM in the same period, in line with the market consensus and at the same pace as April’s.

Personal income gained 0.4% in May vs. 0.3% seen in April while personal spending gained 0.2%.

Technically Speaking...

JCI continued to fluctuate within its consolidation range between 4,775-4,909 after being knocked on Wednesday.

Prior 50-day EMA has turned into resistance at 4,870 while the next one lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD inched slightly higher but still below the zero line while RSI has continued to seesaw near the neutral zone. Volume went up a bit.

DILD hit its stop level at 439 and the reco exited at 10.41% losses.

Day Ahead

JCI is seen to continue trading within the confine of its consolidation range as the market essentially awaiting for the upcoming July 9th presidential election. USDIDR remains weak as the pair ended the day at 12,091. The index could still weaken to 4,770-4,800, but it is likely to be limited on both sides. Upside is seen  capped at around 4,909.

Click here to download the full update (PDF)

Morning Dew - 26 June 2014

BI OK with IDR Weakness

JCI fell again on Wednesday as lack of positive catalysts continue to limit the upside potential of the index. Depreciating IDR also put the index under pressure.

Bank Indonesia said on Wednesday that it would allow IDR to depreciate in exchange for boosting competitiveness of exports. This would help improving the country’s trade balance, it stated. IDR has been dogged by several factors such as rising oil prices, Federal Reserve exit strategy from low-rate environment as well as political uncertainties ahead of July 9th presidential election.

Finance Minister Chatib Basri forecast the trade balance will be at US$500 million of surplus in May as CPO exports improved both in terms of price and volume. In April the trade balance hit a deficit of US$1.96 billion.

USDIDR pushed through the 12k mark to 12,027 on Wednesday, up from 12,000 a day earlier.

As for Inflation...

BI Deputy Governor expects inflation to be around 0.3% to 0.5% in June against the month’s historical average.

On annual basis, inflation is seen to ease to 6.6% or 6.7% in June, from 7.32% recorded in May.

As the statistical impact from the last year’s fuel price hike dissipates, the second half of 2014 inflation is seen lower compared to last year’s.

For the entire 2014, the government aims at inflation rate of 5.3% compared to Bank Indonesia’s target range of 3.5% to 5.5%.

Technically Speaking...

JCI erased Tuesday’s gains as it returned to the lower 4,800s. It still risks heading towards the next EMA support: the 100-day EMA at 4,775-4,780.

Prior 50-day EMA has turned into resistance at 4,870 while the next one lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD inched slightly higher but still below the zero line while RSI has turned lower again heading towards the oversold zone. Volume went down a bit as well.

No additional recommendation for now.

Day Ahead

Depreciation of IDR is now seen as an additional factor capping the upside potential for JCI. Moreover, as expected JCI continues to be under pressure on Wednesday even after the index bounced on Tuesday. This could weaken the index further to 4,770-4,800 due to lack of fresh catalysts and domestic political landscape which continues to heat up ahead of the July 9th election day.

Click here to download the full update (PDF)

Morning Dew - 25 June 2014

CPGT Sunk

JCI bounced after a series of declines, but still need to move higher to reduce the risk for deeper fall. Lack of new catalysts seem to be capping both upside and downside potentials, at least until we pass the July 9th presidential election.

CPGT shares plunged to as low as Rp54 per share but ended at Rp59 per share or down 26.25% after three of its top management were arrested on the suspicion of misappropriation of funds at Koperasi Cipaganti, of which financial activity is separated from the CPGT’s according to a CPGT disclosure on Tuesday.

While CPGT sunk, BUMI bounced after the shares were hit hard as the company has been unable to secure approvals from bondholders in its effort to renegotiate the bonds set to mature in early August.

USDIDR ticked up to 11,971 on Monday, compared to 11,967 a day earlier.

Mitrabara Adiperdana

Coal miner Mitrabara Adiperdana aims to raise Rp313billion to Rp368billion from an IPO which offers 22% of its shares (273,03 million shares) at the price range of Rp1,150-1,350 per share.

About 58.5% of the proceeds will be used for facility improvements in the company’s subsidiary, while 35% will be used for working capital  and 6.5% for the company’s capital expenditures.

Sucorinvest Central Gani and Danareksa Sekuritas were appointed as underwriters of the IPO.

Technically Speaking...

JCI bounced to end the day at 4,862. It still risks heading towards the next EMA support: the 100-day EMA at 4,775-4,780, however.

Prior 50-day EMA has turned into resistance at 4,870 while the next one lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD inched slightly higher but still below the zero line while RSI also turned slightly higher but still near the oversold zone. Volume went down a bit as the fall deepened, suggesting the downside pressure has eased.

No additional recommendation for now.

Day Ahead

Despite Tuesday’s rebound, JCI has broken its lower bound of its consolidation range at 4,865. This could weaken the index further to 4,770-4,800 support area as lack of fresh catalysts caps the upside potential. Domestic political landscape continues to heat up ahead of the July 9th election day.

Click here to download the full update (PDF)

Morning Dew - 24 June 2014

Next Shoe to Drop

The fall deepened as the lack of positive catalysts have led investors to gradually exit the market ahead of the July 9th presidential election. The third debate between presidential hopefuls were aired on Sunday but there has been no decisive indication that any of the pairs are going to get a comfortable win.

Elsewhere, BUMI continues to fall as concerns heightened over the risk of the company default.  No approvals have been received from the bondholders to reschedule the company’s US$375 million debt set to due on August 5th. BTEL and ELTY have defaulted on their bonds payments last year, and without renegotiation of the bonds, BUMI may as well be the next one to default. Another source of funds will be issuance of new shares which will need extraordinary general meeting of shareholders which has been scheduled for later this month.

USDIDR ticked up to 11,971 on Monday, compared to 11,967 a day earlier.

China, US and Europe Data

China’s manufacturing PMI returned  above 50.00 mark in June. The index gained from 49.4 to 50.8, better than consensus of 49.7.

US manufacturing sector also improved in June as the PMI ticked up from 56.4 to 57.5, also better than the consensus of 56.0.

Existing home sales grew 4.9% in May (month-on-month) accelerated from 1.5% growth seen in April.

Conversely, European PMI were mostly down in June, hence leading the DAX and FTSE down.

Technically Speaking...

JCI continues its descent post breaking the 50-day EMA curve. It is now on course towards the next EMA support: the 100-day EMA at 4,775-4,780.

Prior 50-day EMA has turned into resistance at 4,870 while the next one lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Next support is now seen at at 4,800 and 4,775-4,780 afterwards where the 100-day EMA lies.

MACD continued to tick down alongside RSI. Volume went up as the fall deepened, suggesting the intensity of the decline.

No additional recommendation for now.

Day Ahead

JCI has broken its lower bound of its consolidation range at 4,865. This could weaken the index further to 4,770-4,800 support area as lack of fresh catalysts caps the upside potential. Domestic political landscape continues to heat up ahead of the July 9th election day.

Click here to download the full update (PDF)

Morning Dew - 20 June 2014

Downside Risk

JCI is now staring at more weakness ahead as the index slipped below its 4,865 support. Lack of significant catalysts ahead of the July 9th election has once again led investors to run for cover. Tensions between two sides competing at the election also heat up, effectively dampening the impacts of news coming out of U.S.

From the US, jobless claims fell 6k to 312k in the week ended June 14th. Meanwhile, the Conference Board released its index of leading economic indicators for May which came at 0.5% gains after a 0.3% gains in April.

On Wednesday, Janet Yellen reiterated that the Fed will continue to reduce the pace of asset purchases while expecting interest rates to stay low for a considerable time (six months, perhaps?) after the stimulus is entirely removed. No specific timetable was given as she said that there is no mechanical formula for such thing.

USDIDR ticked down to 11,916 on Thursday, compared to 11,978 a day earlier.

Bank Dinar IPO

PT Bank Dinar Indonesia  sets its offering price at Rp110 per share on its initial public offering on Thursday.

The Company offered 500 million of shares which represent 22.22% of its equity. The amount translates to Rp55 billion, of which 75% will be used to expand its credit to customers while the remaining 25% will be allocated for expanding its business network.

PT Andalan Artha Advisindo Sekuritas has been appointed as the sole underwriter of this IPO.

Technically Speaking...

JCI crashed below its 50-day EMA support as the index continues to be under pressure.

Near-term resistance now lies at 4,909, followed by 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

As 4,865 made way, next support is now seen at at 4,800 and 4,770 afterwards where the 100-day EMA lies.

MACD continued to tick down while RSI ticked slightly higher but still hovering around the neutral zone. Volume however, is not on the ascend, so the current weakness may be temporary. 

No additional recommendation for now.

Day Ahead

JCI has broken its lower bound of its consolidation range at 4,865. This could weaken the index further to 4,770-4,800 support area as lack of fresh catalysts caps the upside potential. FOMC’s decision seems to be well anticipated and countered by domestic political landscape which continues to heat up ahead of the July 9th election day.

Click here to download the full update (PDF)

Morning Dew - 19 June 2014

Fed Rate Unchanged

JCI has continued to struggle to hold on to its broken its support area around 4,865, driving the JCI back into the recent range between 4,865-4,911.

US Federal Reserve has reduced a further $10 billion of its monthly bond-buying program, taking the stimulus amount down to $35 billion. The Fed funds rate remains unchanged, as expected. No surprises from the meeting as the Fed maintains its course towards exiting its accommodative monetary policy.

Janet Yellen reiterated that the Fed will continue to reduce the pace of asset purchases while expecting interest rates to stay low for a considerable time (six months, perhaps?) after the stimulus is entirely removed. No specific timetable was given as she said that there is no mechanical formula for such thing.

USDIDR climbed higher to reach 11,978 on Wednesday, up from 11,863 a day earlier.

New Forecasts

Fed officials however, forecast that the interest rate will rise more rapidly once the first rate increase begins sometime next year.

By the end of 2015, Fed officials expects the rate at 1.13% and 2.5% a year after, higher than last March’s forecasts of 1% (end of 2015) and 2.25% (end of 2016).

Inflation remains below the Fed’s 2% objective as PCE index went up 1.6% in April while CPI gained 2.1% in May. PCE index has been considered as the Fed’s main gauge of inflation.

Technically Speaking...

JCI continues to move back and forth within its consolidation range between 4,865 and 5,091.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term, roughly around the same level as the 50-day EMA curve. Subsequent support lies at 4,800. 

MACD heads lower again after several failed attempts to return to above the zero line. RSI has also turned lower, heading towards the oversold area. 

No additional recommendation for now, and at the moment a total of 

seven recommendations are active and all of them are holding on.

Day Ahead

JCI is seen to continue consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. As US markets gained post the FOMC decision, JCI may also gain support from the rise. No big surprise from the Fed meeting will also clear the doubt among investors as no key short-term headwinds are seen at the moment.

Click here to download the full update (PDF)

Morning Dew - 18 June 2014

Eyes on the Fed

JCI has broken its support area around 4,865, driving the JCI back into the recent range between 4,865-4,911.

US CPI gained 0.4% (MoM) and 2.1% (YoY) in May. Both figures beat the consensus of 0.2% and 2.0%, respectively. While inflation gains pace, the growth itself has been pretty much within the Fed’s tolerance. Meanwhile, housing starts fell 6.5% in May, reversing a 12.7% gains in April.

FOMC meeting will conclude its 2-day meeting today and it is widely expected that rates will stay unchanged while another US$10bn of stimulus is about to be slashed. Other than the rate decision will be the speech delivered post-meeting, which could be slashed

USDIDR scored another gains to finish the day at 11,863 from 11,814 on Tuesday.

Pupuk Indonesia Sells Bonds

Pupuk Indonesia offered two series of bonds: A with 3-year term and B with 5-year term.  The company expects Rp3.7T to be raised from the bond offering, of which 41% to be used to pay loans for its subsidiary, while 32% for expansion of PT Pupuk Kalimantan Timur. About 8% will be allocated for the company’s development of logistics and 12% and 7% to develop the company’s business entities in energy and property sectors, respectively.

Technically Speaking...

JCI continues to move back and forth within its consolidation range between 4,865 and 5,091.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term, roughly around the same level as the 50-day EMA curve. Subsequent support lies at 4,800. 

MACD heads lower again after several failed attempts to return to above the zero line. RSI has also turned lower, heading towards the oversold area. 

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

JCI is seen to continue consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. FOMC meeting will be the biggest event for this week. As usual, the FOMC is set to take away another US$10bn off its stimulus while readying the market for its policy change in 2015.

Click here to download the full update (PDF)

Morning Dew - 17 June 2014

Sitara & Magna IPOs

JCI slipped as it now approaches the support area at 4,865.

Sitara Propertindo offers its shares between Rp105-115 in its IPO. The company is expected to raise between Rp420billion to Rp460billion from the offering which will be used to support several of its subsidiaries (63.51%). The remaining proceeds will be used to pay the company’s debts (36.49%).

Sitara’s offers include 2 billion shares of series 1 warrants with 2:1 ratio which means every 2 new shares will given 1 warrant.

Sitara has appointed Sinarmas Sekuritas as the underwriter of the IPO process. Book building will start from June 16th till June 18th 2014, the offering period will start from July 2nd to July 4th 2014

USDIDR bounced back to 11,814 on Monday after hitting 11,781 on Friday.

Magna Finance IPO

Magna Finance set its offering price for the initial public offering  between Rp102-115 per share.

About 700 million shares or 70% of its equity are being offered to public, and this could yield between Rp71.4billion to Rp80.5billion from the proceeds. Along with the offering are 100 million series 1 warrants as sweetener.

Jasa Utama Capital has been appointed as the sole underwriter of the IPO.

All proceeds will be used as additional working capital.

Technically Speaking...

JCI continues to move back and forth within its consolidation range between 4,865 and 5,091.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term, roughly around the same level as the 50-day EMA curve. Subsequent support lies at 4,800. 

MACD heads lower again after several failed attempts to return to above the zero line. RSI has also turned lower, heading towards the oversold area. 

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

JCI is seen to continue consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. FOMC meeting will be the biggest event for this week. As usual, the FOMC is set to take away another US$10bn off its stimulus while readying the market for its policy change in 2015.

Click here to download the full update (PDF)

Morning Dew - 16 June 2014

Back to Square One

JCI fell for another 0.16% on Friday, erasing earlier gains seen at the beginning of the week, settling the week into a 0.2% losses.

Lack of new catalysts have been limiting the index’s movement throughout the week as BI rate decision has been kept unchanged and no other key economic releases managed to sway global stock indexes anywhere.

Friday also saw China’s data due. Industrial production was up 8.8% in May (YoY), slightly better than 8.7% seen in April while retail sales accelerated to 12.5% in May (YoY), also faster than 11.9% seen in April.

From the US, the core PPI for May gained 2% vs. 2.3% consensus vs. 1.9% seen in April. The preliminary estimate of University of Michigan Confidence index was down to 81.2 from 81.9, lower than the consensus take of 83.0.

USDIDR fell to 11,781 from 11,813 on Friday.

Batavia Prosperindo IPO

Batavia Prosperindo Internasional set the offering price between Rp450-500 which represents the PE ratio between 8.2 to 9.2x. 

From 150 million shares offered to the public, the company aims at raising Rp33.7 to 37.5billion, of which 50% of the amount will be used to finance the business activities of its subsidiary Batavia Prosperindo Securities. The other 50% will be used by Batavia Prosperindo Asset Management for business expansion.

Technically Speaking...

JCI was back to square one last week as earlier gains were lost, taking the index back to its consolidation range between 4,865 and 5,091.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term, roughly around the same level as the 50-day EMA curve. Subsequent support lies at 4,800. 

MACD continued to gyrate as it nears the zero line while RSI has returned to the neutral zone. 

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Week Ahead

JCI is seen to continue consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. FOMC meeting will be the biggest event for the coming week. As usual, the FOMC is set to take away another US$10bn off its stimulus while readying the market for its policy change in 2015.

Click here to download the full update (PDF)

Morning Dew - 10 June 2014

On A Wrong Foot

JCI took a stab to hit the low of 4,876 as the index started the week on a wrong foot. The consolidation range remains intact however, as the support stays at 4,860-65 while the resistance stays at 5,091.

Strong US payrolls failed to bring support to the JCI as well as the recently announced GDP forecast by Bank Indonesia.

For the second quarter, Bank Indonesia expects the GDP to accelerate from 5.21% in 1Q to 5.3%. Household consumption and investments are seen to be the key drivers behind the acceleration.

USDIDR slipped to hit 11,790 from 11,823 on Monday.

Minor Shock

The government’s plan to raise the electricity tariffs starting July 1st 2014 is seen having relatively small impact on inflation, according to the Finance Minister Chatib Basri.

The plan is expected to deal and additional 0.1% to 0.2% to inflation and is not expected to cause necessary revisions to the government’s inflation target for this year. In 2014, the target for inflation growth is around 5.3% to 5.5%.

The House of Representative has yet to approve the hike proposal so far.

Technically Speaking...

JCI fell to hit 4,876 as the index hit the lower band of its consolidation range.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term, roughly around the same level as the 50-day EMA curve. Subsequent support lies at 4,800. 

MACD slipped again, moving away from the zero line while RSI slipped further as the index sunk. RSI is now approaching the oversold area.

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

JCI is seen consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. Incoming domestic and overseas economic data have not bring any significant impact on the market so far. Technically speaking, the JCI is seen nearing an end of its consolidation phase.

Click here to download the full update (PDF)

Morning Dew - 3 June 2014

Trade Fell, Inflation Ticked Up

Inflation was reported at 0.16% (month-on-month) in May 2014 while on annual basis the figure was at 7.32%. The market consensus forecast MoM figure between 0.09% to 0.1%. Year-to-date, inflation now stands at 1.56%. Behind the higher-than-consensus reading were higher prices in housing, water, electricity, gas and fuels component and the processed foods, beverages, cigarettes, and tobacco component.

Trade balance worsened in April 2014 to US$1.97 billion  as crude oil exports were declining by 26.7%. Exports were down 2.63% (MoM) while imports rose 11.9% (MoM).  On annual basis, imports fell 1.3%.

BTEL has been downgraded to  Restricted Default by Fitch.  The downgrade was led by the unsecured default on a coupon payment in November 2013 and no subsequent coupon payment or public announcement  over the progress of the company’s debt restructuring with its creditors. Fitch assigned RR5 on the company’s recovery rating, down from RR4. RR5 reflected a drop in enterprise value of business with EBITDA is expected to drop to between IDR600 billion and IDR700 billion from IDR911 billion (2013).

USDIDR fell slightly on Thursday to 11,740 from 11,611.

U.S. ISM

US manufacturing PMI ticked up to 55.4 from 54.9 in May. The Markit manufacturing PMI also showed acceleration on the sector from 56.2 to 56.4. Figures above 50 mark expansion while below 50 mark contraction.

US construction spending inched 0.2% higher in April (MoM) from the prior month, much slower than the consensus take which forecast a 0.7% increase.

Technically Speaking...

JCI bounced to end Monday back above 4,900 after a steep fall last Friday.

Resistance is now seen at 5k and subsequently at 5,091. Beyond the latter the index will aim at 5,251 – the all-time high seen last year.

Support is seen at 4,865 in the short-term and 4,800 afterwards.

MACD continues to fall deeper below the zero line while RSI also slipping towards the neutral zone after spending some time near the 70% mark. Volume is expected to be thin throughout the week due to holidays on Tuesday and Thursday.

No additional recommendation for now, and at the moment a total of seven recommendations are active and all of them are holding on.

Day Ahead

JCI is seen consolidating between 4,865 and 5,091 for now as the market continues to wait for the upcoming presidential election on July 9th 2014. Domestic data was mixed with inflation under control but trade data worse than expected. US manufacturing data shows expansion is accelerating, supporting the Dow near record high, thereby giving support to Asia regional stock indexes.

Click here to download the full update (PDF)

Monthly Review - May 2014

US Nonfarm Payrolls were at 288k in April, above the consensus of 215k. February and March figures were revised up to 222k and 203k, respectively from 197k and 192k previously reported; unemployment rate was down to 6.3% from 6.7% seen in March. Consensus forecast jobless rate at 6.6%. The sharp drop in jobless rate was attributed by the sharp drop in workforce in April. After an additional 503k civilians entering the workforce, 806k left in April.

The Contenders. Two presidential candidates are going to participate in the presidential election scheduled on July 9th 2014. Joko Widodo has announced Jusuf Kalla as his running mate while Prabowo Subianto has announced Hatta Rajasa as his running mate. The presidential election issue has been limiting the JCI movement so far, and this is expected to remain throughout June until the election is past.

Clashes In Ukraine. Clashes continued in Ukraine between the government and the separatists. While the Russian troops have been ordered to return to base. Elsewhere in Crimea, the country moved a step further towards integration with Russia. Crimea opted to use ruble as its currency.

 

Exit Strategy. FOMC has US$45bn left in their stimulus to remove and this mid-June meeting is expected to see another US$10bn. This will bring the monthly bond purchases to US$35bn. Based on the FOMC minutes issued in May, the FOMC has started discussing on how to exit the easy monetary policy and start raising rates. No decisions have been taken so far but this signals that higher rates have started showing on the horizon, even if it still has to wait for 2H15 to come true. Stanley Fischer will be joining the FOMC panel in the upcoming meeting. The former Bank of Israel governor was nominated by the US Senate.

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