Morning Dew - 23 December 2014

A Photo Finish

Despite the drop on Monday, the JCI’s outlook for the rest of the year remains upbeat. The record high is still within reach and there’s hardly a negative catalyst around as the Fed hype trumped most if not all, negative vibes.

Even the USDIDR continues to fall, ending the day at 12,435 after it scored a big jump last week to 12,900. FOMC’s assurance that the Fed is being patient with rates seems to have reversed the flow of the greenback back to IDR, especially with Bank Indonesia will remain vigilant over the impact of recent subsidized fuel price hike towards inflation.

Oil prices will be one of those key factors in 2015 to watch. Monday saw another drop with WTI crude fell 3.17% to $55.32/bbl and Brent crude fell 2.12% to $60.08/bbl. Continuous drop of oil prices will force the Fed to wait for a while before they can justify an interest rate hike, even amidst the improving US jobs market.

Rebuilding the Nation

Infrastructure and construction will be the key driver in the coming year, assuming the President can secure enough money to realize his vision. On the other hand, he must keep his political opponents at bay by keep on working and producing results. Else, he will face political risk which could disrupt the big picture that he envisioned.

Commodities prices remain on the slump, a risk for miners to face in 2015. Higher rates, pricier electricity, and relatively more expensive USD are also challenges faced by the nation in 2015.

The Great Divide

In the end Yellen and Co. managed to deliver the market from getting a big slump as the Fed stated its patience on rates. The coming year is likely to feature the Federal Reserve mostly as their policy will be put under the tight watch by investors. How soon the rates will be raised will be the key theme for 2015. It’s a great divide, considering that Europe and Japan are still gloomy and the door is still open for more stimulus. China’s revival is awaited, but not sure that this can happen soon enough considering Europe is still in a slump.

Technically Speaking...

The doji star has warned of the impending fall and that was exactly what happened on Monday. The JCI dropped to end at 5,125, not severe enough as it remains on track to break through the barrier at 5,262.

However, should the index continues to fall, 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. 

The coming sessions will offer trading range for the JCI, between 5,000 and 5,262, at least for the remainder of the year. This year however, the JCI has been up by almost 1,000 points (last year-end the JCI was at 4,274) and next year, we see the index to journey north, heading towards the uncharted territories with 5,700-6,000 being the target area. 

ECII has met its entry price, and the reco is now active.

The daily update will return on January as this is the last one for this year. We wish you all a happy holiday and a better year in 2015!

Click here to download the full update (PDF)

Morning Dew - 22 December 2014

Stumbling Block

JCI put on a strong finish for the week above 5,140, tracking the world stocks rally and erasing earlier losses incurred at the start of the week. FOMC’s wording to be “patient” on rates has put the JCI back on track to break through the barrier at 5,262, the record high for the index.

USDIDR resumed its slide to end the week at 12,500 after earlier jump to 12,900 at the beginning of the week.

Oil prices have bounced a bit on Friday. The WTI crude oil was 5.1% higher at US$57.13/bbl  while the Brent crude oil was up 3.56% to US$61.38/bbl.  The decline of oil prices have been considered as a stumbling block for the Fed as it will put inflation under pressure, giving lack or no room for the policymakers to justify for higher interest rates.

What’s next for the Fed to decide will depend also on the oil prices. Should the oil prices stay under pressure, the central bank will indeed be “patient” on rates. On the other hand, the US jobs market has improved recently, providing the Fed a reason to start raising rates soon.

SUPR

SUPR: is planning to conduct rights issue worth Rp2.4tn early next year. The plan has been approved by the shareholders  and the proceeds are to be used to pay the equity bridge facility from BNP Paribas, HSBC, ING Bank NV and JPMorgan Chase as well as Standard Chartered Bank. These banks have provided loans worth US$790 million, of which US$140 million (6-mos term) will be repaid using the rights issue funds. The remaining US$650 million (4yrs, 6mos term) will be repaid using bonds issuance next year.

Technically Speaking...

JCI returned above 50-day EMA curve again as the strong showing on Friday also bent the MACD, putting the MACD back on track to resurface beyond the zero line. Judging from the volume, Friday’s rise was backed up by a very strong volume, a good news for the bulls.

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.

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. 

A doji star has appeared on the daily chart as Friday’s candle was somewhat separated from the prior ones and ended in a doji formation. This should be a warning that despite the potential additional gains ahead, the index is also ripe for a setback after putting a strong rally.

The coming week will offer trading range for the JCI, between 5,000 and 5,262. 

Week Ahead

It looks as if the JCI is going to have a merry end for this year. With Fed euphoria still in the air, the index is back on track to break its record high at 5,262. It may as well happen just before the year ends. But then again, strong consecutive gains recently have also presented a risk of some setback. All in all, JCI is seen fluctuating around 5,100-5,262.

Click here to download the full update (PDF)

Morning Dew - 19 December 2014

Breaking the Barrier

World stocks celebrated the FOMC’s wording as markets rallied on the assumption that the US federal funds rates won’t be up as soon as originally thought. Oil prices which have been under pressure recently, are dampening the prospect of higher rates.

JCI also cheered the Fed’s statement. The index jumped 1.5% to end back above 5,100 at 5,113. This has re-opened the prospect of breaking through the tough barrier around 5,262 and to end the year on a strong footing.

USDIDR continued to slide from the recent peak at 12,900 to 12,565 by the end of Thursday’s trading session. A perceived delay in US interest rates hike seemed to have put a brake on USD-based assets purchases and redirecting the flow back to IDR-based assets.

Overnight, US jobless claims were reportedly down by 6k in the week ended Dec 13.  The smaller the number the claims, the better and the figure supported the recent payrolls data which showed an additional of 321k jobs  back in November.

GWSA, Oil

GWSA: is offering bonds worth Rp500bn with the coupon rate between 13% and 14.25% with 5-year term. The proceeds from the bonds will be used to finance the construction and operational activities of TCC Batavia Tower (Rp150bn) and for developing projects and business development of the company.

From the energy market, WTI crude oil price saw another drop of $1.77 (3.13%) to $54.70/bbl while the Brent crude oil also fell $1.55 (2.53%) to $59.63/bbl.

Technically Speaking...

JCI returned above 50-day EMA curve again as the strong showing on Thursday also bent the MACD, putting the MACD back on track to resurface beyond the zero line. Judging from the volume, Thursday’s rise was backed up by a very strong volume and this surely a good news for the bulls.

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.

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. 

The week will offer similar trading range for the JCI, between 5,000 and 5,250. 

Day Ahead

JCI is poised for a merry ending this week as US stocks resumed its power rally overnight.. Rupiah is likely to strengthen more following   the Fed’s recent comment. For Friday, JCI is seen between 5,100 and 5,200.

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Morning Dew - 18 December 2014

Saved by the Fed

The Fed came to the rescue to boost ailing sentiment which had put the global stock market under pressure recently. Result of the FOMC meeting was that the Fed has removed its “considerable time” and replaced it to “can be patient”, referring to the timing of normalization of monetary policy.

Sharp drop in oil prices have left the FOMC with hardly any justified reason to raise rates sometime in 2015. About 45% drop in oil has also put Russia into a crisis, an eerie reminder of 1998 crisis also originating from Russia. Russia had its ruble declined by about 47% this year, tracking the retreat of oil prices. The rout subsided on Wednesday however, as WTI inched higher to $56.27/bbl while Brent rose to $60.79/bbl. 

Latest measure taken by Russia is to ease accounting rules to curb the needs for dollars for banks. The move has boosted ruble and Russian stocks but need more time to assess whether the measure can put an end to the current crisis.

IDR, AHAP, AGRIS

IDR: fell to 12,720 on Wednesday, from 12,900 seen on Tuesday. BI has intervened in order to cap on IDR’s weakness.

AHAP: 11M14 net profit reached Rp14.09bn, up 5% from the same period last year. 

AGRIS: Bank Agris has set its offering price at 110 per share, bringing the IPO proceeds to about Rp99bn. About 70% of the funds will be used for credit expansion while the remainder will be used to expand the business network.

Technically Speaking...

JCI managed to hold its ground above 5,000 support, but despite downside risks remain at the moment the upside potential for a rebound is also present.

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 has re-entered the sub-zero line while the RSI sunk towards the oversold area. This suggests that the index remains vulnerable to further drop but a potential rebound is likely in the near-term.

The week will offer similar trading range for the JCI, between 5,000 and 5,250. 

Day Ahead

Fed’s patience and a halt (for now) in oil prices should be positive catalysts for the JCI on Thursday. Rupiah however, remains vulnerable and this will be put under the spotlight along with developments in oil prices. Deeper drop in oil will mean more risk to bear for Russia but the same thing will hold  the Fed’s hand from pushing the US interest rates up. For now, JCI is seen between 5k and 5,150.

Click here to download the full update (PDF)

Morning Dew - 17 December 2014

Ruble in Rubbles

JCI fell 1.6% as global stocks were on retreat on Tuesday. The index briefly tested its support at 5,000 but settled at 5,026, trimming its prior losses.

Currency rout also continues as the IDR fell further to end at 12,900 but there’s still barely anything to help boost the rupiah in the short-term.

Brent fell 91c to $60.15 after previously reached $58.50, while the WTI ended at $55.57 a barrel, down another 37c. 

The US central bank itself is holding a two-day meeting to decide on US monetary policy on Tuesday and Wednesday. The market wants to see if the FOMC finally unplugs its “considerable time” wording from its post-meeting statement.

Ruble in rubbles as the Russian currency sunk to 68 per dollar even after the Russian central bank hiked interest rate by 6.5% to 17%. The ruble has been hit by both economic woes as well as the steep dive in oil prices.

PSKT, SKBM, WSKT

PSKT: is planning to add 20 new hotels by 2020. The Tune Hotels operator is to use private placement as well bonds issuance to fund the expansion. In 2015 the company expects to build three hotels at Tendean, Kelapa Gading and Cengkareng.

SKBM: adds one production line in Sidoarjo which will raise  the production capacity by another 300 tons per month. Currently, the Sidoarjo line’s capacity is at 800 tons per month. The new line is scheduled to start its operation around 1Q15.

WSKT: is considering rights issue to strengthen the company’s capital. There is no set date yet for the corporate action, but it is likely scheduled for next year.

Technically Speaking...

JCI fell for another 1.61%, close to touching the support at 5,000.

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 has re-entered the sub-zero line while the RSI sunk towards the oversold area. This suggests that the index remains vulnerable to further drop in the near-term.

The week will offer similar trading range for the JCI, between 5,000 and 5,250. As the upside remains sluggish, the downside risk cannot be ruled out.

Day Ahead

JCI started the week on a weak footing. For Wednesday, expect the index to remain under pressure as the US were in the red overnight. IDR is also facing strong pressure and is now approaching 13k, something unseen since 1998. A range between  5,000 to 5,250 is seen for the current week. Oil prices, IDR and Ruble will be the focus for the day.

Click here to download the full update (PDF)

Morning Dew - 16 December 2014

Return to 1998

Global rout continues on Monday as major stock indexes around the world were mostly down. JCI as expected, tracked the losses in global indexes seen on Friday and tumbled 1%. In addition, IDR revisited the low of 1998 as the ailing currency resumes its decline.

USDIDR started the week stronger, reaching 12,599 per US$ vs. Friday’s 12,432. Anticipation of higher rates in the US as well as US$ demand for debt repayments are cited as behind the recent downturn.

Oil prices remain vulnerable as Brent fell 2.3% to end at $60.45 a barrel. The global benchmark is seen falling to as low as $50 a barrel next year, according to Bloomberg survey. Meanwhile, WTI oil fell 4.48% to end at $55.22 a barrel.

Continuous rout in oil prices will put a challenge on the FOMC’s plan to raise rates sometime in 2015. It will also pose a challenge to the recent government’s decision to raise prices of subsidized fuel in Indonesia.

AKKU, GZCO, CTRS, KDSI

AKKU: is planning to conduct a private placement for about 23 million shares with the price being offered at Rp320 per share. This translates to a proceeds of Rp7.36bn.

GZCO: aims at an increase of 20% in sales worth Rp600bn in 2015. By the end of 3Q14 the company has reached Rp366bn, higher than Rp265bn in 3Q13 or up 38%. Full year 2014 revenues is seen at Rp500bn.

CTRS: is confident to be able to reach the 2014 target sales of Rp650bn. This year revenues came in mostly from CitraLand, CitraLand Utara and the Green Lake.

KDSI: is looking for 15-20% growth of revenues in 2015 vs. 2014.

Technically Speaking...

JCI started the week on a weak footing as the JCI fell 1%.

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 has re-entered the sub-zero line while the RSI remains stuck near the neutral area. This suggests that while the index is steady, the risk of slipping further remains as indicated by MACD. 

The week will offer similar trading range for the JCI, between 5,000 and 5,250. As the upside remains sluggish, the downside risk cannot be ruled out.

Day Ahead

As expected, the JCI started the week on a weak footing. For Tuesday, expect the index to still face pressure as the Europe and US came down again overnight on the back of more oil slump. IDR is also facing strong pressure and is now back to a level of 12,599, something unseen since 1998. A range between  5,000 to 5,250 is seen for the current week.

Click here to download the full update (PDF)

Morning Dew - 15 December 2014

Oil Slick Ahead

Oil rout continues as WTI for January fell $2.14 or 3.6% to $57.81 a barrel while Brent declined $1.83 to $61.85 a barrel. Prolonged weakness of oil prices may actually put the US Federal Reserve’s off track of its rate rise scenario. With little or no inflation catalyst, the central bank will have a hard time justifying its plan to raise the Fed funds rate sometime in 2015.

The US central bank is set to meet on Tuesday and Wednesday, and with unemployment rate at 5.8%, the gauge has been well below the Fed’s mark of healthier recovery. With QE3 gone, the market will be keen to see whether the Fed will finally drop the words “considerable time” from the FOMC statement, to open the door wide open for a higher interest rate. For now, the expectations are for the Fed to raise rates sometime in mid-2015.

Domestic car sales fell 15% in November 2014 (yoy) to 91,449 units. 11M14 sales reached 1,129,746 units or 0.2% lower from the same period a year earlier. The target for this year seems to be hard to achieve, which is set at 1,250,000 units.

USDIDR continues to climb on Friday, reaching 12,432 per US$ vs. Thursday’s 12,336.

WIKA, COWL

WIKA: Trimmed government budget on infrastructure projects has led to the delays on several state-owned enterprises this year, including WIKA. The company expects to earn just 90% of its total target set earlier at Rp678.65bn. Net profit is expected to be at Rp610.76bn and by the end of 3Q14 the accumulated net profit has reached Rp400.71bn. For new contracts, 11M14 the total worth of new contracts is at Rp13.9tn, or 53.81% of target set for this year at Rp25.83tn.

COWL:  Obtained credit facility on Dec 10th 2014 based on Facility Agreement from PT QNB Indonesia and Qatar National Bank SAQ Singapore Branch. The credit worth US$163 million and will be used for working capital, project developments and other financing.

Technically Speaking...

JCI inched higher on Friday, settled at 5,160, but barely able to make significant breakthrough on the upside.

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 has re-entered the sub-zero line while the RSI remains stuck near the neutral area. This suggests that while the index is steady, the risk of slipping further remains as indicated by MACD. 

The coming week will offer similar trading range for the JCI, between 5,000 and 5,250. As the upside remains sluggish, the downside risk cannot be ruled out.

Week Ahead

Friday saw a major upheaval stemming from the energy sector where oil rout continues.  With over 300 points drop in DJIA, it is very probable that the JCI is a likely victim when it returns to the floor on Monday. A continuous drop in oil price is expected to push the government to rethink its recent subsidized fuel price hike. For Monday, expect the index to face pressure as the Asian market responds to the latest oil prices rout seen on Friday. A range between  5,000 to 5,250 is seen for the coming week.

Click here to download the full update (PDF)