Market View - August 24, 2009

Asian markets took another pullback last week. The week started by a dissapointing results from US housing data last week. Building permits fell 1.75% to 560,000 in July and housing starts fell 1.02% to 581,000. Markets plummeted on Wednesday (19/8) led by China as investors concern the tighter lending would hurt China’s economic growth. Positive economic and manufacturing data from US made markets rebound the next day as US leading indicators rose 0.6% in July and manufacturing in Philadelphia rose to 4.2 in August from -7.5 the month before. However, on Friday (21/8) investors once again worried about China shares as the China Banking Regulatory Commission plan to tighten capital requirements for banks. Nikkei fell 3.39% to ended at 10,597, Hangseng plummeted 3.32% to 20,199, Shanghai plunged 2.82% to 2,960. DJIA was up 1.97% due to surprising existing home sales that rose 7.16% in July to 5.24 millions. This week investors will wait for US consumer confidence (25/8), new home sales (26/6) and 2Q GDP (27/8). Market expect consumer confidence will rise to 48, new home sales to 390,000. 2Q GDP is expected to contract 1.4%. Last week JCI fell 2.22% to 2,333, the first pullback after five weeks rally. We expect the market would be very volatile in this week. Our range for JCI this week is 2,278 to 2,387. Our picks are Telekomunikasi Indonesia (TLKM, Buy, R-8,800, S-8,100), Indofood (INDF, Buy, R-2,625, S-2,200), Astra International (ASII, Sell, R-31,000, S-28,000), Bank Rakyat Indonesia (BBRI, Buy, R-7,450, S-6,800) and Perusahaan Gas Negara(PGAS, Buy, R-3,425, S-3,125).