Market View - 31 July 2009

Asian markets rose yesterday, rebounding from earlier declines, as better than expected results from Mitsubishi Electric and Honda Motor. Also comment from China central bank that they will control lending growth by using market tools instead of quantity controls gave investors their confidence back. Nikkei was up 0.51% (+51.97 pts) to 10,165 and Hangseng added 0.49% (+98.58 pts) to 20,234. JCI surged 3.25% (+72.32 pts) to 2,298 led by Bakrie’s shares and banking stocks. Bumi Resources (BUMI) surged 10.23% (+225 pts) after the company released its plan to sell $200 million of convertible bonds. Bank Mandiri (BMRI) advanced 6.08% (+225 pts) after the company posted its better than expected 1H result. US markets rose as companies such as Motorola Inc. and MasterCard. Inc. posted better-than-expected earning results and initial claims held below June levels. DJIA added 0.9% (+83.74 pts) to 9,154 and Nasdaq was up 0.8% (+16.54 pts) to 1,984. Initial claims last week rose 4.47% to 584,000 but it was still below June’s 600,000 average. We are still bullish on JCI as we said yesterday in our Daily Technical. Technial indicators such as MACD, stochastic, moving averages show that JCI is on its upward trend. Earning results, commodity and metal prices and inflation still become our catalyst in the next few trading days. Today we expect JCI is in its 2,245-2,325 trading range. Our picks for today are Tambang Batubara Bukit Asam (PTBA, Buy, R-14,000, S-11,000), BRI (BBRI, Buy, R-7,800, S-6,500), Bank Mandiri (BMRI, Buy, R-4,275, S-3,600), Indofood (INDF, Buy, R-2,850, S-2,300) and Bumi Resources (BUMI, Buy, R-2,850, S-2,300).