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.

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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.

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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.

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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)

Morning Dew - 11 December 2014

Fighting Back

JCI fought back after the index took a sharp downturn earlier this week. The JCI returned to above 5,150 and ended the Wednesday’s session at 5,165, shrugging off the global dip in sentiment due to Greece and China’s issues.

Indonesia budget deficit hit Rp194.08tn by the end of October 2014, or 80.4% of the target (Rp241.5tn). The figure came in higher than the same period last year which was at Rp139.55tn or 62.2% of 2013 target.

Cement sales increased by 3.4% yoy in the first 11 months of 2014 to 54.6 million tons. This means slower growth than 5.6% annual pace seen during the full year of 2013. Politics were the major factor behind the slowdown after mid-year election sparked uncertainties for some time, resulting in delays of some infrastructure projects. Other factors attributed to the slowdown are low commodity prices, and weakened purchasing power. 

Elsewhere, oil prices fell again as Brent dropped 3.9% to $64.24/barrel and WTI fell 4.5% to $60.94/barrel. USDIDR slipped to 12,336 on Wednesday from 12,347 seen on Tuesday.

APEX

APEX: aims at revenues of US$290 million by the end of 2015. The figure is 28.88% higher than the current year’s target revenues which is set at US$225 million. Additional offshore rigs are expected to contribute positively to the company’s financial performance. Offshore contracts are still expected to dominate the company’s revenues by around 80%. On the bottom line, the 2015 figure is expected at US$30 million.

For the next three years APEX has secured a total value of contract amounting to US$614.2 million.

Technically Speaking...

JCI bounced off near its 50-day EMA and ended the Wednesday’s session up at 5,165.

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. 

Although the index bounced, MACD continues to tick lower approaching the zero line. RSI however, has bounced after recent decline.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.

Day Ahead

JCI proved resilient on Wednesday as it shrugged off the global issues such as China and Greece. While the turnaround was encouraging, the upside potential remains limited as there is hardly any new positive key catalysts around. JCI may even weaken following strong showing on Wednesday, especially with the Dow tumbled more than 200 points overnight.  Expect the JCI to trade between 5,100-5,200 on Thursday.

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Morning Dew - 10 December 2014

China Connection

JCI slipped again, settling the day at 5,122 as waves of profit-taking continue.

Global fundamentals have stepped under the highlights on Tuesday, with China took the first turn. 

China’s bonds rated below AAA or sold by issuers graded lower than AA are no longer allowed to be used as collateral for short-term loans obtained through repurchase agreements. The decision has sparked turmoil in Chinese shares as investors reassessed their portfolios related to such rated bonds.

In Europe, the ghost of past Greek crisis has returned as the government decided to fast forward a parliamentary vote on a new head of state. If the ruling PM Antonis Samaras cannot win supports from his political opponents, the vote is likely to be won by the anti-austerity party Syriza. Such win will put a major risk to the country currently undergoing the European bailout program to revive its economy.

USDIDR barely changed on Tuesday, only inching lower from 12,352 to 12,347.

Indonesia CPO

Exports are expected to increase to 21.6 million tons in 2015 while production may reach 32.5 million tons. Price of the commodity is expected to be between US$740-800 per ton. Assuming that the current zero export tariff scheme for CPO exports is maintained by the government, acceleration in exports is to be expected.

In October, exports reached 2.47 million tons, bringing the total of exports to 17.53 million tons. Average CPO price of these exports were at $864.24 per ton. Top markets for Indonesia’s CPO are USA, India, China, Eurozone, Bangladesh and Pakistan.

Technically Speaking...

JCI’s bid to break through its record high may have to wait for a while as the index is seen retreating to around its support at 5,100.

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 continues to tick lower approaching the zero line while RSI has taken a sharper turn lower off its overbought area and back to the neutral zone.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.

Day Ahead

JCI looks soft on Wednesday as China and Greece may weigh on the investors’ sentiment. European and American stocks have been hit by these catalysts and ended lower.  Despite no direct relations to China and Greece, JCI may weaken alongside with the slump in the global sentiment. Expect the JCI to trade between 5,100-5,150 on Wednesday.

Click here to download the full update (PDF)

Morning Dew - 9 December 2014

Slippery Oil

JCI started the week on a weak footing as the index fell back below 5,150. With hardly any key positive catalysts, the already vulnerable rally finally ran out of steam. Elsewhere, US stocks also took a big slap from yet another drop in energy prices.

Brent and WTI oil fell to five-year low as oil slump continues. Brent ended down $2.88 to $66.19/barrel while WTI fell $2.79 to $63.05/barrel. Fastest pace of US production in the last three decades, rising output from the OPEC as well as weakening global demand have put the oil prices under strong pressure recently.

Domestic macroeconomic data showed that banking credit in October were up 12.4% (yoy) at Rp3,587.4T, vs. prior month’s pace of 12.6% (yoy), in line with the moderating economic growth.

USDIDR  started the week with a jump towards 12,352 vs. 12,296 seen last Friday.

TRUB, PSAB, SDPC

TRUB: Losses worsened in 6M14 to Rp160.8bn vs. Rp52.91bn seen in 6M13 as revenues fell to Rp601.88bn (6M14) vs. Rp786.94bn (6M13).

PSAB: 9M14 revenues were up 210.41% to US$202.45 million vs. US$65.22 million (9M13). The bottom line has turned from a loss of US$31.55 million in 9M13 to a net profit of US$12.14 million in 9M14. Assets also grew to US$844.23 million (end of Sep 2014) from US$805.47 million (end of Sep 2013).

SDPC: Ten-month net sales reached Rp1.18T in 2014 with operational costs hit Rp83.32bn while finance costs amounted to Rp17.85bn.  Net profit for the first ten months was at Rp4.87bn vs. Rp3.44bn seen in 9M14. Rising sales were in line with the growth of pharmaceuticals industry which is around 10%.

Technically Speaking...

JCI’s bid to break through its record high may have to wait for a while as the index is seen retreating to around its support at 5,100.

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 continues to tick lower approaching the zero line while RSI has taken a sharper turn lower off its overbought area.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.

Day Ahead

JCI is staring at another vulnerable session on Tuesday after slippery oil market brought down the US stock indexes from record highs. Lack of major positive drivers also expected to contribute to Tuesday’s perceived weakness. As energy market continues to tumble, the pressure is mounting for the government to re-evaluate its gasoline pricing policy after recent price hike. Expect the JCI to trade between 5,100-5,150 on Tuesday.

Click here to download the full update (PDF)