Market View - August 5, 2009

Asian markets ended mix yesterday as futures on US market fell into negative territory despite positive results from manufacturing index and construction spending. Nikkei added 22.54 pts (+0.22%) to 10,375 while Hangseng fell 10.83 pts (-0.05%) to 20,796. Higher oil and metal prices became the catalyst as market expected economic recovery. JCI added 21.29 pts (+0.91%) to 2,360 led mostly by commodity stocks. DJIA added 33.63 pts (+0.4%) to 9,320 as pending home sales rose 3.6% in June, higher than the +0.7% market expected. On corporate news, Caterpillar Inc. increased their earnings outlook from $8/share to $10/share in 2012. Japanese stocks opened positive this morning as Toyota Motor Corp. raised its outlook.                         Based on technical, JCI broke out its 61.8% fibonacci retracement at 2,170 and now tries to break out its 76.4% fibo retracement at 2,425. JCI’s weekly chart forms a soucer shape with its neckline at 2,556. If JCI breaks out 76.4% fibo retracement then it is possible JCI moves to 2,556 which is also this week’s third resistance. Bank Indonesia is expected to cut BI Rate by 25 bps to 6.5% today as inflation fell to 2.71% yoy in July, lower than June’s 3.65% yoy. Our range for JCI today is 2,339-2,382 and our picks are Tambang Batubara Bukit Asam (PTBA, Buy, R-14,800, S-11,000), Astra International (ASII, Buy, R-32,400, S-30,000), Adaro Energy (ADRO, Buy, R-1,450, S-1,260), Bank Rakyat Indonesia (BBRI, Buy, R-8,000, S-6,500) and Jasa Marga (JSMR, Buy, R-1,940, S-1,680).