Market View - 03 August 2009

It was another positive week for Asian markets last week despite Wednesday (29/7) selloff from China’s market. Nikkei surged 4.14% to 10,356 last week while Hangseng ended at 20,573, added a 2,96% gain. DJIA was slightly up 0.86% to 9,171. Data from US showed that the pace of economic decline slowed as mention in the Fed’s beige book. New home sales jumped 10.98% in June to 384,000 while initial claims reached 584,000 last week. 2Q GDP contracted 1%, better than the -1.5% market expected. However, US consumer confidence dropped to 46.6 in July, lower than June’s 49.3 reading. In Japan, factory output rose 2.4% in June. This week markets will wait for several US economic data such as construction spending (3/8), factory orders (5/8) and unemployment rate (7/8). Markets expect construction spending will contract 0.6% in June, better than May’s -0.9% while factory orders is expected to rise 0.5% in June, lower than May’s 1.2%. Markets also prepare for another high unemployment rate at 9.6% in July.                                                              JCI surged 6.32% last week, ended at 2,323. Bakrie’s shares and banking stocks led our market. For this week we forecast JCI will be in a 2,231 to 2,369 range. One positive catalyst for JCI would be a lower inflation. BPS forecast month on month inflation in July could be as low as 0.2%-0.5% and year on year at 3%. Our picks for this week are Tambang Batubara Bukit Asam (PTBA, Buy, R-14,000, S-11,000), Astra International (ASII, Buy, R-32,400, S-27,200), Bank Mandiri (BMRI, Buy, R-4,625, S-3,600), United Tractors (UNTR, Buy, R-13,500, S-11,500) and Bumi Resources (BUMI, Buy, R-3,500, S-2,300).