Morning Dew - 27 January 2014

Emerging Risk

While concerns over China’s recent manufacturing slip-up and that the Fed has started its tapering process were already pretty much factored in by the markets, the emergence of risks coming out of emerging economies is relatively fresh for investors.

Argentina’s central bank has decided to abandon its support to its currency. Currency controls have been scrapped, allowing the purchase of dollars for savings.

In South Africa, rand fell 1.8% on the back of mining issues while Ukraine suffered from political turmoil. Turkey is still struggling after been hit by corruption scandal, which sapped the investors’ confidence. Its lira intervention efforts have been unable to lift the currency.

All the emerging economies’ problems originated mainly on the Fed’s decision to taper its $85bn stimulus, sending money out of emerging economies.

Fed In Focus (Again)

The FOMC is set to meet next week and the market will be keen to see how much the stimulus reduction will be this time. The first tapering was $10bn, taking the remaining monthly purchases to $75bn. It is likely that the Fed will keep the same pace at $10bn. Despite improving life signs of the US economies, the Fed may not want to rush things by going aggressive.

If however, the Fed opts to refrain from cutting the stimulus, the market may rebound from recent slump.

Technically Speaking...

JCI sunk to end at 4,437 on Friday as all sectors turned red.

Toppish MACD and RSI as well as stochastics, as well as declining volume suggest that the index is vulnerable to correction.

For now, the support comes in at around 4,430 (the upper-EMA band), but this could be easily sliced through on Monday, putting the next support at 4,380 and 4,335 (the middle and lower EMA curves). We cannot rule out a straight dive to the latter next Monday.

With 4,430 is most likely gone, the upper-EMA band will be the closest resistance, followed by 4,510.

Week Ahead

Friday’s selloffs in US and Europe were ill omens for JCI’s outlook next week. The week is likely to start on a wrong foot. The FOMC meeting will be in focus, while developments in the emerging economies engulfed in turmoil (such as Brazil, South Africa, Argentina, Turkey and Ukraine) are also going to be watched keenly by investors. 

Click here to download the full update (PDF)

Morning Dew - 24 January 2014

Flash Alerts

Stocks posted more gains on the back of recent update from IMF over the global economic growth outlook. JCI ended at 4,477.49, up 0.56% from prior session.

Slowing manufacturing sectors in US and China reported post-closing of JCI. Flash estimates from the January readings were behind the fall of US and European stocks fall. This may echo on Friday’s trading sessions in Asia.

Agriculture (+1.81%) and finance (+1.48%) sectors were the top gainers, while consumer goods (-0.39%), mining (-0.27%) and trade (-0.22%) fell.

IDR ended slightly weaker at 12,173 per US$.

BI said that inflation may exceed 1% in January as the combination of severe flood, higher LPG price as well as rising electricity tariffs are seen driving prices up.

China and US PMIs Slipped

A flash estimate of manufacturing PMI showed that China’s manufacturing contracted in January. The PMI index from HSBC/Markit fell from 50.5 to 49.6, well below consensus of 50.4 and also below the expand/contract borderline level of 50. Above 50 is considered as expanding while below 50 is considered as contracting.

US preliminary PMI also fell in January from 54.4 to 53.7 instead of heading up to 55.0 as forecast by consensus.

Technically Speaking...

JCI inched higher to end at 4,496.04 on Thursday. 

Both RSI and stochastics indicators remained around the overbought area, whilst MACD held its position above the zero line. Volume however, has not been able to rise to new heights. This signals potential exhaustion. 

Next resistance area lies around 4,600-4,610. Fibonacci projection targets 4,700, however. On the downside, near-term support lies at 4,450-4,460, 4,400 and subsequently, 4,327 - a prior resistance now turned into support. Below 4,327 we also have support at 4,175 and 4,109.

Day Ahead

The upside potential remains intact for now, but worse than expected PMI readings from China and US may prompt profit-taking on Friday. The index is expected to retreat before it resumes to knock on the 4,600-4,610 resistance area. Should it pass the resistance area, 4,700 awaits. Below 4,400 may drive the index approaching the lower 4,300 support area.

Click here to download the full update (PDF)

Morning Dew - 23 January 2014

IMF’s View

Stocks posted more gains on the back of recent update from IMF over the global economic growth outlook. JCI ended at 4,477.49, up 0.56% from prior session.

Better assessment on US economy was the major driver behind the upward revision of IMF’s growth outlook.

Mining (+1.91%), trade (+1.62%) and consumer goods (+1.46%) sectors were the top gainers, while property (-0.87%) and basic industries (-0.80%) fell.

IDR ended slightly weaker at 12,149 per US$.

IMF Upgrades

IMF has raised its forecast for global economic growth from 3.6% to 3.7% this year. Stronger US growth is cited as the major factor behind the upgrade.

US is now seen growing 2.8% in 2014, upgraded from 2.6% seen in earlier forecast (October 2013).

For 2015, the world economic growth is expected at 3.9%.

Technically Speaking...

JCI broke through the barrier at 4,459 recent high as well as the 200-day EMA and finished at 4,477.49. 

Both RSI and stochastics indicators remained around the overbought area, whilst MACD held its position above the zero line. Volume however, has not been able to rise to new heights. This signals potential exhaustion. 

Next resistance area lies around 4,600-4,610. Fibonacci projection targets 4,700, however. On the downside, near-term support lies at 4,450-4,460, 4,400 and subsequently, 4,327 - a prior resistance now turned into support. Below 4,327 we also have support at 4,175 and 4,109.

Day Ahead

The upside potential remains intact for now. The index is expected to knock on the 4,600-4,610 resistance area where its bullish commitment will be tested. Should it pass, 4,700 awaits. Below 4,400 may drive the index approaching the lower 4,300 support area.

Click here to download the full update (PDF)

Morning Dew - 22 January 2014

Investments Broke Record

Stocks posted another gains as the JCI rose 0.47% to finish at 4,452.50.

Other than BKPM’s Direct Investments report, no particularly significant news nor economic data released on Tuesday. US data also stays soft until Thursday when the jobless claims report are to be released along with some housing data.

Property (+2.30%) and mining (+1.02%) sectors were the top gainers, while miscellaneous industries stayed weak as it fell lagged for another 0.75%. 

IDR ended slightly weaker at 12,122 per US$.

Record Direct Investments in 2013

Indonesia Investment Coordinating Board (BKPM) revealed that DI in Indonesia jumped 27% to IDR398.6T in 2013, beating the target of IDR390T. Domestic DI grew 39% (IDR128.2T) while the Foreign DI grew 22% (IDR272.6T)

For 2014, BKPM projected a 15% growth of DI (IDR456T), slower than prior periods but considered normal after a string of strong growth.

Technically Speaking...

JCI resumed its rise to end at 4,452 after reaching the intraday high at 4,457, just below the recent high of 4,459 where it bumped into the 200-day EMA. 

Both RSI and stochastics indicators remained around the overbought area, whilst MACD held its position above the zero line. 

Next resistance area lies around 4,600-4,610. Fibonacci projection targets 4,700, however. On the downside, support lies at 4,400 and subsequently, 4,327 - a prior resistance now turned into support. Below 4,327 we also have support at 4,175 and 4,109.

Day Ahead

The upside potential remains intact for now. The index is expected to knock on the 4,600-4,610 resistance area where its bullish commitment will be tested. Should it pass, 4,700 awaits. Below 4,400 may drive the index approaching the lower 4,300 support area.

Click here to download the full update (PDF)

Morning Dew - 21 January 2014

A Good Start

Stocks kick-started the week on a right footing as the JCI gained 0.44%. 

China’s economic data were mostly neutral as they were not far off from the consensus numbers. 

Agriculture (+2.63%) and infrastructure (-2.32%) sectors were the top gainers, while miscellaneous industries lagged (-0.95%). 

IDR ended slightly higher at 12,110 per US$.

China Growth Slowed

China’s 4Q GDP slowed to 7.7% (YoY) from 7.8%, while QoQ GDP also slowed to 1.8% from 2.2%. Initially, the consensus forecast GDP at 7.6% (YoY) and 2.0% (QoQ).

Industrial production also slowed from 10% to 9.7% (YoY) in December, but retail sales managed to stay strong at 13.6% in December (YoY) compared to 13.7% pace seen in November.

Technically Speaking...

JCI started the week inching higher to end at 4,436. The index recently had hit the high at 4,459 and bumped into the 200-day EMA. 

Both RSI and stochastics indicators remained around the overbought area, whilst MACD held its position above the zero line. 

Near-term, resistance lies at 4,459, while next resistance area lies around 4,600-4,610. Fibonacci projection targets 4,700, however. On the downside, support lies at 4,400 and subsequently, 4,327 - a prior resistance now turned into support. Below 4,327 we also have support at 4,175 and 4,109.

PGAS reached its target price at 4,600. The recommendation is now closed after it gained 7.23%.

Day Ahead

The upside potential remains intact for now. The index is expected to knock on the 4,600-4,610 resistance area where its bullish commitment will be tested. Should it pass, 4,700 awaits. Below 4,400 may drive the index approaching the lower 4,300 support area.

Click here to download the full update (PDF)

Morning Dew - 20 January 2014

In A Standstill

Stocks ended flat on Friday as lack of fresh catalysts put the market in a standstill.

Agriculture (-1.05%), misc. industry (-4.08%) and manufacturing (-1.07%) sectors were down at the end of the day.

IDR ended flat at 12,127 per US$.

TALF re-entered the IDX on Friday. The stock was previously delisted in 2009. Starting at IDR400, the stock finished at IDR411 at the end of the day. TALF which operates in packaging industry, was established in 1977.

Confidence Slipped

Confidence slipped in January in the US, according to the preliminary data from University of Michigan. The reading (80.4) was both less than consensus (83.5) and the December reading (82.5).

Elsewhere, industrial production slowed to 0.3% after it registered a 1% increase in November.

Housing starts fell in December by 9.8% after a strong gains of 23.1% in November. Building permits continued to slip in December, falling by 3% after 2.1% decline a month earlier.

Technically Speaking...

JCI finished flat on Friday. The index recently had hit the high at 4,459 and bumped into the 200-day EMA. 

Both RSI and stochastics indicators remained around the overbought area, but volume has been slipping a bit, indicating the recent weakness might have been some temporary correction. MACD held its position above the zero line despite it stalled at the moment. 

Near-term, resistance lies at 4,459, while next resistance area lies around 4,600-4,610. Fibonacci projection targets 4,700, however. On the downside, support lies at 4,400 and subsequently, 4,327 - a prior resistance now turned into support. Below 4,327 we also have support at 4,175 and 4,109.

Week Ahead

While JCI took a breather, the upside potential remains intact for now. The index is expected to knock on the 4,600-4,610 resistance area where its bullish commitment will be tested. Should it pass, 4,700 awaits. Below 4,400 may drive the index approaching the lower 4,300 support area.

Click here to download the full update (PDF)

Morning Dew - 17 January 2014

New Stocks on the Block

Three new debutants arrived at IDX: ASMI, CANI and BINA. ASMI gained 50% as the insurer settled the day at IDR405. Marine logistics operator CANI ended 19.5% higher while BINA, the second bank going public this year, finished the session with gains of 12.5%.

IDR fell again to end the day at 12,177 per US$.

JCI itself fell after a string of gains. Only two sectors ended up: agriculture (+0.84%) and mining (+0.03%). The high-flying finance sector took a 1.35% fall as profit-taking set in.

CPI Inched Higher

Jobless claims inched lower during the week ending Jan 4th. The reading of 325k was less than 328k expected initially.

US inflation at the consumer level inched higher. December’s numbers were 1.5% (YoY), with core was at the steady pace of 1.7% (YoY). Timid inflation may give some restrain to the Federal Reserve’s tightening campaign.

Technically Speaking...

JCI stepped back after a string of gains. The index recently hit the high at 4,459 and bumped into the 200-day EMA. 

Both RSI and stochastics indicators are entering the overbought area, but volume also on the rise, indicating the power of the rally. MACD has been up for four days in a row, also underlining the strength of the rally. Wednesday’s setback may serve as a temporary correction.

Near-term, resistance lies at 4,459, while next resistance area lies around 4,600-4,610. Fibonacci projection targets 4,700, however. On the downside, support lies at 4,400 and subsequently, 4,327 - a prior resistance now turned into support. Below 4,327 we also have support at 4,175 and 4,109.

Day Ahead

While JCI took a breather, the upside potential remains intact for now. The index is expected to knock on the 4,600-4,610 resistance area where its bullish commitment will be tested. Should it pass, 4,700 awaits. Below 4,400 may drive the index approaching the lower 4,300 support area.

Click here to download the full update (PDF)