Great Expectations
JCI marked its start for the year with relatively solid performance as it maintains the prospects of breaking through the historical all-time high of 5,262. Optimism over the government infrastructure agenda has boosted sentiment so far. The big question is, will the government’s mega-projects can finally come true?
Consumer confidence fell in December. The index (IKK) fell to 116.5 from 120.1, while the current economic condition index (IKE) also fell from 114.1 to 110.2. The consumer expectations index (IEK) too, fell 3.3 points to 122.8 from 126.1. Note that the IEK gauges the expectations for the next 6 months, while the IKE compares the current conditions against six months ago. Raised fuel prices were considered as behind the falling confidence, but compared to a year earlier the confidence was better this time.
USDIDR continues to weaken as the pair climbed to Rp12,732 per US$ from Rp12,658 per US$.
Commodity Updates
CPO Update: Production is expected to reach 31 million tons in 2014 compared to 29.5 million tons last year. Weather conditions remain the risk faced by CPO producers while transition from older trees to younger ones are also a constrain for production. Despite the constraints, the CPO prices will be supported after recent slump due to oversupply.
Coal Update: Ban of exports of mineral ore has limit forex earnings from the mining sector and now the government aims to raise royalties for coal miners that hold Mining Business Permit (IUP) to compensate for the lost earnings. The target is around Rp44.3tn in 2015, higher than Rp39tn target set for 2014, which is likely to be missed as the figure only reached Rp34.3tn by mid-December.
FOMC Minutes
FOMC Minutes showed that the U.S. central bank is unlikely to raise rates before April. The minutes supported the post-meeting statement from Janet Yellen that the rates may be held near zero through at least the first quarter 2015. In addition, while the state of global economy poses a threat to the U.S. economy, positive developments of the U.S. economy itself are seen mostly counterbalancing that risk. According to the minutes, inflation is at risk of getting too low beyond the Fed’s target of 2%.
Technically Speaking...
JCI continues to stay above its EMA supports, maintaining the potential to reach new heights early this year.JCI marked its start for the year with relatively solid performance as it maintains the prospects of breaking through the historical all-time high of 5,262. Optimism over the government infrastructure agenda has boosted sentiment so far. The big question is, will the government’s mega-projects can finally come true?
Consumer confidence fell in December. The index (IKK) fell to 116.5 from 120.1, while the current economic condition index (IKE) also fell from 114.1 to 110.2. The consumer expectations index (IEK) too, fell 3.3 points to 122.8 from 126.1. Note that the IEK gauges the expectations for the next 6 months, while the IKE compares the current conditions against six months ago. Raised fuel prices were considered as behind the falling confidence, but compared to a year earlier the confidence was better this time.
USDIDR continues to weaken as the pair climbed to Rp12,732 per US$ from Rp12,658 per US$.
Commodity Updates
CPO Update: Production is expected to reach 31 million tons in 2014 compared to 29.5 million tons last year. Weather conditions remain the risk faced by CPO producers while transition from older trees to younger ones are also a constrain for production. Despite the constraints, the CPO prices will be supported after recent slump due to oversupply.
Coal Update: Ban of exports of mineral ore has limit forex earnings from the mining sector and now the government aims to raise royalties for coal miners that hold Mining Business Permit (IUP) to compensate for the lost earnings. The target is around Rp44.3tn in 2015, higher than Rp39tn target set for 2014, which is likely to be missed as the figure only reached Rp34.3tn by mid-December.
FOMC Minutes
FOMC Minutes showed that the U.S. central bank is unlikely to raise rates before April. The minutes supported the post-meeting statement from Janet Yellen that the rates may be held near zero through at least the first quarter 2015. In addition, while the state of global economy poses a threat to the U.S. economy, positive developments of the U.S. economy itself are seen mostly counterbalancing that risk. According to the minutes, inflation is at risk of getting too low beyond the Fed’s target of 2%.
Technically Speaking...
However, should the index falls back inside the EMA envelope, it will risk returning to the 5k area.
We have seen several attempts to bring down the resistance at 5,200, 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.
The coming sessions will continue to offer trading range for the JCI between 5,000 and 5,262. This year however, the JCI is seen up to set new highs, heading towards the uncharted territories with 5,700-6,000 being the target area.
We added RAJA to the reco pool. Note that no absolute stop is indicated, considering everyone has different methods/thoughts to exit a trade. Target is 2,100, almost 30% upside potential. The reco met its entry at 1,635.
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