Morning Dew - 12 November 2014

Fighting Back

JCI struck back as the index climbed its way above 5k. Several positive catalysts involved were political reconciliation between political elites and optimism over the economy after the President’s presence in the APEC summit reinforced beliefs that Indonesia will become a more important key player in the regional economy under Jokowi’s tenure.

Upside is expected to remain capped by the government’s plan to cut fuel subsidy however, as this will naturally push the inflation up, somewhat similar to last year’s fuel price hike.

Rising inflationary pressure may push Bank Indonesia (BI) which is set to meet on Thursday for regular meeting to raise rates as well if the risk of inflation endangers the central bank’s inflation target for this year (at 4.5% plus or minus 1%)

USDIDR gained on Tuesday, ended the day at 12,163 from 12,138 seen on Monday.

ITMG, TAXI, INCO

ITMG recorded net sales of US$1.48bn in 9M14, down from US$1.63bn in 9M13. Net profit however, up to US$168.85 million compared to US$155.86 million.

TAXI’s revenues gained 26% in 9M14 from Rp506.29bn to Rp640.15bn. Net profit grew 15% to Rp109.25bn.

INCO will distribute interim dividend for FY2014 worth US$0.01007 per share. The date is set for Dec 17th 2014 for shareholders listed by 3 Dec 2014.

Technically Speaking...

JCI bounced on Tuesday as the index found its way back above 5k. The rebound however, may open a way back to return to the highs of 5,200s.

However, should the index fails to follow through the gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still below zero after recent decline, RSI curled up a bit after being taken back to the neutral area.

For Wednesday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Tuesday’s rally will need more convincing push to the upside or risk slipping back below 5k. Technical outlook improved a bit, but remains cloudy.

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Morning Dew - 11 November 2014

Screeching Halt

JCI slipped further on Monday as lack of significant catalysts put pressure on the index. The US nonfarm payrolls slowed in October, trailing the market consensus and reducing the earlier optimism.

Automotive Industry Association (Gaikindo) released its data on domestic car sales which showed that sales have fallen by 6.3% to 104,916 units in October 2014 (yoy), taking the cumulative number of sales for the first ten months of 2014 to 1.04 million units, only 1.6% higher from the same period last year. On the other hand, the motorcycle sales also declined, taking the total units sold for the Jan-Oct period to 6,760,557 units, just 3.5% above same period last year.

Slowing economy, weaker currency as well as the anticipation of higher fuel prices were cited as the factors behind the decline in auto sales.

USDIDR slipped further on Monday, ended the day at 12,138 from 12,149 seen last Friday.

Forex Reserves, ISAT

Forex reserves only inched higher in October to US$112b from last month’s US$111.2bn. Income from oil and gas exports as well as rising income from forex deposits in BI were cited as the factors behind the rise.

ISAT booked revenues of Rp17.72tn in 9M14 compared to 9M13 when it booked Rp17.79tn. Losses incurred by the company shrunk to Rp1.32tn vs. Rp1.76tn last year.

Technically Speaking

JCI started the week soft, staying submerged below 5k but it remains within the confines of 4,900-5,100 trading range.

Losing the 5k support could lead to more downside as the index is now eyeing at the bottom end of the range around 4,900. In-between, the 200-day EMA at around 4,920 will be the subsequent cushion for the JCI. Below 4,900, support area lies at 4,835-4,840 (prior congestion area).

On the upside, former support at 5k now turns as resistance, while 5,100 will be the next interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI fell again.

For Tuesday, expect the trading range between 4,900 and 5,000.

ECII has been added to the list of recommendations.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Monday’s decline reinforced the downside potential of the JCI. Technical outlook however, points at more downside to come instead.

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Morning Dew - 10 November 2014

Trailing the Consensus

US economy has added 214k new jobs in October, trailing the consensus of 235k additional new jobs and lower than the 257k new jobs added in September. The unemployment rate however, ticked lower to 5.8% from 5.9% during the same period.

October’s NFP was the ninth consecutive figure above 200k, the longest since 1994, despite it fell below the market consensus. The US equities were relatively flat at the end of the day. As long as the payrolls maintain its number above 200k, the market is likely to stay relatively optimistic on how the US economy would be able to weather the upcoming higher rates in the US. Jobs market has been one of FOMC’s key trigger for raising rates and so far the figures were solid enough to justify the central bank to raise the Fed funds rate sometime in 2015. In its recent meeting the FOMC has scrapped its bond-purchasing program.

USDIDR stepped back to 12,149 from 12,179 on Friday.

MSCI, RBMS, Ratings

MSCI Indonesia small cap semi-annual index review had three stocks added to the list: ELSA, TARA, and WTON while removing TAXI, PADI, SRIL and TRAM.

RBMS sales hit Rp22.57b in 9M14, up from Rp15.22b booked in last year, but the bottom line saw Rp3.96b losses compared to last year’s losses of Rp2.65b

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APLN’s outlook has been revised to Negative from Positive by Pefindo; Fitch has assigned a national long-term rating of A(idn) with stable outlook to SRTG; Moody’s has affirmed B1 corporate family rating on SRIL and B1 rating on $300 million senior unsecured notes.

Technically Speaking...

JCI crashed below the 5k mark on Friday, taking out the key support at 4,995 despite it remains within the confines of 4,900-5,100 trading range.

Losing the 5k support could lead to more downside as the index is now eyeing at the bottom end of the range around 4,900. In-between, the 200-day EMA at around 4,920 will be the subsequent cushion for the JCI. Below 4,900, support area lies at 4,835-4,840 (prior congestion area).

On the upside, former support at 5k now turns as resistance, while 5,100 will be the next interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI fell again.

For Monday, expect the trading range between 4,900 and 5,000.

Week Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Less than expected US nonfarm payrolls figure is also seen as a neutral catalyst. Individual plays are expected to dominate as the market is still digesting the recent flow of 3Q14 financial reports. Technical analysis of JCI however, shows weakness is on the horizon as the Friday’s fall took out important support around 5k.

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Morning Dew - 7 November 2014

Eyes on Jobs Data

PT Intan Baruprana Finance Tbk. has set its initial offering price between Rp311-383 per share. The company plans to use 50% of the IPO funds for working capital and the other 50% for debt repayment. About 1.67b shares are to be offered and BNI Securities has been appointed as sole underwriter.

Unemployment rate ticked up in August 2014 from 5.7% (Feb 2014) to 5.94%. According to BPS, there were 7.24 million people without a job vs. 7.15 million (Feb 2014). The jobless data is announced twice a year.

US nonfarm payrolls is set for release on Friday, the consensus expects 235k jobs added to the economy, slightly lower than September’s 248k. Unemployment rate is expected to stay at 5.9%

USDIDR jumped to 12,179 from 12,092 on Thursday.

SAME, MBSS, BRAU

SAME booked net profit of Rp41.89b in 9M14, up 37% from the same period last year which stood at Rp30.58b. Revenues were up from Rp247.13b to Rp299.96b.

MBSS’s revenues fell to US$103.83 million from US$112.05 million, sending the net profit to fell from US$28.29 million to US$16.51 million.

Moody’s downgraded BRAU to B3 from B2 for both bonds issued by BCE and Berau Capital Resources Pte. Ltd. In addition, all the ratings are also put on review for possible downgrade.

Technically Speaking...

JCI fell to 5,034 on Thursday, but it maintains its recent trading range between 4,900 and 5,100.

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI stumbled after it hit the overbought area a few sessions earlier.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Friday, expect the trading range maintained around 4,900-5,100.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100 as the market is now waiting for the government’s decision to raise the prices of subsidized fuel.  Combined with recent GDP data which showed that slowdown continued in 3Q14, an energy shock from higher fuel prices could dent growth further. This will distance the economy farther from reaching Jokowi’s GDP target of around 7%. From abroad, the market also awaits the release of US nonfarm payrolls for October this Friday.

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Morning Dew - 6 November 2014

Growth Slowed

Economic growth slowed to 5.01% (year-on-year) in 3Q14, the slowest pace in five years. Previously, in 2Q14 the GDP grew 5.12% (year-on-year) while in 3Q13 it grew 5.62% (year-on-year).

GDP slowdown was attributed mainly on two factors: slowing global growth and the impact from recent ban on mineral ore exports (although somewhat relaxed on some commodities after its adoption).

Slowing global growth came mostly from China, one major source of demand for Indonesia’s commodities. In additions, vulnerable commodities’ prices have also weighed on exports.

Private consumption’s share towards GDP has also declined in 3Q14 to 55.11% from 55.72%, and this could slip further considering the government is planning to cut fuel subsidy further.

USDIDR fell to 12,092 from 12,130 on Tuesday.

BIRD, BRNA

BIRD took off on its first flight on Wednesday as the taxi operator finished its first session up 14.62%. Originally set the offering price between Rp7,200 and Rp9,300, BIRD eventually offered at Rp6,500. According to the company, the demand mostly came from foreign investors (60-65%) while the remainder came from domestic investors.

BRNA booked a sterling financial performance in 9M14 as net profit went more than tenfold from Rp3.81b to Rp41.33b. Forex gains were the major driver for the increase while revenues grew from Rp701.75b to Rp948.5b.

Technically Speaking...

JCI remains stuck within the large consolidation range of 4,900 and 5,100 after recent failure to capitalize on an upside breakout above 5,100.

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD edged lower while the RSI stumbled near the overbought area.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Thursday, expect the trading range maintained around 4,900-5,100.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100 as the market is now waiting for the government’s decision to raise the prices of subsidized fuel.  Combined with recent GDP data which showed that slowdown continued in 3Q14, an energy shock from higher fuel prices could dent growth further. This will distance the economy farther from reaching Jokowi’s GDP target of around 7%. From abroad, the market also awaits the release of US nonfarm payrolls for October next Friday.

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Morning Dew - 5 November 2014

Prelude to Energy Shock

JCI fell 0.29% amidst lack of fresh catalysts but the index maintains its position within a wide range of 4,900-5,100.

VP Jusuf Kalla confirmed that subsidized fuel prices will be increased this November. No specific mention about how much the raise will be, but the consensus is around Rp2,000 to Rp3,0000 per liter which represents a nearly 50% of increase.

Previously, on Monday the government launched three forms of social safety nets to anticipate higher fuel prices: KIS (Kartu Indonesia Sehat), KIP (Kartu Indonesia Pintar) and KKS (Kartu Keluarga Sejahtera).

A while back, BI Governor Agus Martowardojo said that raising subsidized fuel prices is a way to deal with the twin deficits faced by the government: the fiscal one and the current account.

USDIDR inched higher to 12,130 from 12,105 on Monday.

PTPP, WTON

PTPP plans to spend Rp490.6b for capex in 2015, up from this year’s Rp446b. The sources for the capex will come from internal cash, bank loans as well as bonds. By August 2014, the company has realized 50% of the total capex prepared or about Rp225b.

WTON is set to start the construction of its concrete factory in Balikpapan. The factory with the capacity of 50-100k tons is scheduled to be completed in 2016. Currently, the company’s production capacity is at 2.2 million tons per year. Its Lampung plant set to be completed this year and to add another 250k tons of production capacity.

Technically Speaking...

JCI remains stuck within the large consolidation range of 4,900 and 5,100 after recent failure to capitalize on an upside breakout above 5,100.

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD edged lower while the RSI stumbled near the overbought area.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Wednesday, expect the trading range maintained.

Day Ahead

The big question now is not about when the fuel prices are to be raised, but it’s about how much will they be raised. One thing is clear though: we’re facing another energy shock similar to last year. The difference is that this time it was well advertised before the presidential election and this time the savings from the subsidy cut are hopefully, used to finance the government’s programs. Overall, the JCI is seen fluctuating within its familiar range of 4,900-5,100.

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Morning Dew - 4 November 2014

A Mixed Start

JCI started November on a mixed tone as the consolidation continues within a wide range of 4,900-5,100.

With nearly all of the constituents have already submitted their 3Q14 reports, there will be yet another shortage of key catalysts.

On the macroeconomics front, inflation data showed that October inflation hit 0.47%, higher accelerating from September’s rate of 0.27%.The year-on-year figure came in at 4.83%, up from 4.54% seen in September. Core inflation, which strips volatile food and fuel prices, came in at 4.02%, slower than 4.04% registered on September. Higher electricity tariffs and volatile food prices were cited as the causes of accelerating inflation.

USDIDR inched higher to 12,105 from 12,082 on Monday.

Trade and Manufacturing

Trade balance showed narrowing deficit in September, from US$318 million to US$270 million. Oil and gas items showed deficit of US$1.03b while the non-oil and gas still recorded surplus of US$760 million.

HSBC Purchasing Managers’ Index for October showed Indonesia’s manufacturing activity slipped to 49.2 points from 50.7 points. Figure below 50 represents contraction while above 50 signifies expansion.

In Japan, the Nikkei 225 index soared after the Bank of Japan increased stimulus, contrasting the removal of quantitative easing by the US Federal Reserve.

Technically Speaking...

JCI had a brief spell above 5,100 on Monday but finished the session back below it. 

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked higher while the RSI stumbled near the overbought area.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Tuesday, expect the trading range maintained but with slight upside bias.

Day Ahead

Higher than average October inflation came in at the time when the market awaits for the government’s decision over the fuel subsidy. How much and when the fuel prices are to be raised will be the market’s next focus. From abroad, the global market will once again sets its eyes on the US jobs report which is expected to moderate from 248k to 228k in October while jobless rate steady at 5.9%. Overall, the JCI is seen fluctuating within its familiar range of 4,900-5,100.

Click here to download the full update (PDF)