Market View - August 18, 2009

Market was open in a positive mode last week in response to promising data from US unemployment rate Japan machinery orders. China’s retail sales expanded and UK housing market showed improvement in July while US productivity rose 6.4% in 2Q. However, Asian market took a pullback on Wednesday (12/8) as investors worried that China’s stimulus package could not completely offset slumping export demand. Market rebounded the next day as the Federal Reserve expressed their positive outlook that the recession was easing. The Fed also kept their rate at 0.00% to 0.25%. US Retail sales unexpectedly fell 0.1% in July and initial claims rose 0.72% to 558,000. Meanwhile the German and French economy grew 0.3% each in the 2Q from the 1Q. Last week DJIA fell 0.52% to 9,321. Hangseng surged 2.54% to 20,893 and Nikkei added 1.58% to 2,386. JCI was up 1.58% to 2,386 last week. Our GDP rose 4% yoy in the 2Q, a little bit lower than the 1Q’s 4.4% yoy. Morgan Stanley revised our economic growth in 2009 from 3.7% to 4.4% and 2010 from 5.0% to 5.5%. On political issue, the Constitutional Court rejected an appeal by by JK-W and Mega-Pro. Altough indicators such as OBV and stochastic show a bullish pattern, however a decrasing MACD histogram triggers a warning that JCI would take a pullback. It is likely JCI will take a correction to its 61.8% fibo at 2,170. Our range this week is 2,356 to 2,408. Our picks are Indofood (INDF, Buy, R-2,850, S-2,300), PP London Sumatera (LSIP, Buy, R-8,900, S-6,900), Astra International (ASII, Sell, R-30,000, S-27,200), Aneka Tambang (ANTM, Buy, R-2,875, S-2,150) and Telekomunikasi Indonesia(TLKM, Sell, R-9,100, S-8,400).