Market View - August 6, 2009

Asian stocks fell yesterday after a dissapointing results from Isuzu Motors and Elpida Memory. Positive news from UK’s consumer confidence that rose to 60 could not help Asian markets. Nikkei plunged 122.48 pts (-1.2%) to 10,252 and Hangseng plummeted 301.66 pts (-1.5%) to 20,494. JCI fell 43 pts (-1.82%) to 2,317. US stocks fell after worse-than-expected report on job losses and service industries. DJIA fell 39.22 pts (-0.4%) to 9,280 and Nasdaq fell 18.26 pts (-0.9%) to 1,993. ADP Employer Services showed companies cut 371,000 workers in July, more than the 350,000 cut market expected. Meanwhile, the ISM’s index of service busineses fell to 46.4 in July from 47 the month before. Market expected ISM services will rise to 48. Bank Indonesia cut its BI Rate by 25 bps to 6.5% as expected. However, BI also indicated that further cuts might be unwarranted as inflation was expected to rise next year. Based on technical, JCI took a pullback after a three-weeks rally. Using fibonacci, we have a 76.4% retracement at 2,425 as our strong resistance and 61.2% retracement at 2,170 as a strong support. We expect another pullback in the coming days because of valuation play. Our range for JCI today is 2,296-2,350 and our recommendations are Tambang Batubara Bukit Asam (PTBA, Buy, R-14,800, S-11,000), Astra International (ASII, Sell, R-30,000, S-27,200), Adaro Energy (ADRO, Buy, R-1,450, S-1,260), Int’l Nickel Indonesia(INCO, Buy, R-5,350, S-4,050) and Indofood (INDF, Sell, R-2,300, S-1,730).