Market View - August 31, 2009

Nikkei surged 2.89% to 10,238 while Shanghai plummeted 3.38% to 2,960 last week. Hangseng fell 0.50% to 20,199, DJIA was up 0.41% to 9,544. Trading was opened by a positive data from US; existing home sales rose 7.16% in July to 5.24 millions and a comment by the Federal Reserve Chairman Ben S. Bernanke that the global economy was beginning to emerge from recession. Speaking of Bernanke, President Obama nominated him for a second term as the Fed’s chairman. Positive reading kept coming as US consumer confidence rose to 54.1 in August and home price index also rose 15.44% in June. However investors worried about the Chinese stocks rally as the Chinese Government said they were not “blindly” optimistic about the economy. Also the Goverment plan to restain production in the steel and cement industries and to increase “guidance” over parts of the coal, glass and power industries. The week ended by another positive data from US. New home sales rose 9.62% to 433,000 in July, durable orders rose 4.9% in July, initial claims fell 1.72% to 570,000 and 2Q GDP fell 1.0% as expected. This week investors will focus on US data such as construction spending (31/8) and unemployment rate (4/9). From domestic, investors will wait for August’s inflation and Rapat Dewan Gubernur Bank Indonesia on Thursday (3/9). Last week JCI added 1.89% gains to 2,377. Our range for JCI this week is 2,362 to 2,386. We see 2,400 would be a short-term resistance and 2,425 as strong resistance. Our picks are Telekomunikasi Indonesia (TLKM, Buy, R-9,100, S-8,350), Indofood (INDF, Buy, R-2,850, S-2,350), Perusahaan Gas Negara(PGAS, Buy, R-3,425, S-3,125), Astra International (ASII, Buy, R-32,000, S-28,000), and Bank Rakyat Indonesia(BBRI, Buy, R-8,250, S-7,150).