Strong Showing Likely As Trading Resumes

When trading resumes on Monday after the week-long Idul Fitri holiday, Indonesia’s stock market is expected to open higher, supported by stable regional financial markets and slow inflation, analysts in Jakarta said.

“Regional markets were up by an average of 2.5 percent this week, so there is a good chance that the Jakarta Composite Index is set to open higher on Monday,” said Edwin Sebayang, head of research at the Jakarta-based MNC Securities.

The Hang Seng index in Hong Kong lost 1.8 percent on Friday but was up 3.2 percent for the week. The Nikkei 225 average in Japan dropped 1.2 for the day but had gained 1.7 percent in five days.

The JCI closed down 0.1 percent at 3,841.73 on Aug. 26, the latest day of trading and was little changed for the week.

Investors were monitoring the latest US employment report for signs of the state of the nation’s economy.

The government reported that in August, the unemployment rate was steady at 9.1 percent, suggesting that the US economy was at risk of slipping back into recession. Still, non-farm payrolls were unchanged in August after an 85,000 jobs gain in July.

The Dow Jones industrial average opened down 1.2 percent on Friday after rising 1.9 percent at the start of the week to Thursday.

Edwin said that global markets are starting to stabilize as US economic data showed the country was not stumbling into a recession.

“Economic indicators show that the US is actually far from recession, the economy was just slowing down,” he said.

He pointed to manufacturing activity, with the sector’s ISM index dipping to 50.6 in August compared to 50.9 in July — significantly higher than the consensus expectation of 48.5.

On Thursday, US weekly jobless claims were 409,000, slightly l ower than forecast of 410,000.

Edwin said that the market was also anticipating more stimulus from the Federal Reserve to spur the US economy.

The Fed was discussing a more aggressive rate policy to stimulate economic growth as well as a policy “linking rates to path of jobless rate,” Reuters reported on Wednesday.

Harry Su, head of research at state brokerage firm Bahana Securities, said the Indonesian market would take its cue from Asian markets’ openings on Monday morning. He was optimistic that this week’s positive sentiment would last through next week.

“Despite today’s [Friday] lackluster performance, regional markets were still positive for the week, and I think the Indonesian market should rise in tandem,” Harry said.

He added that he expected investors to see Indonesia, with its strong macroeconomy and limited reliance on exports, as a safe haven should the external volatility continue.

He recommended investors buy shares in domestic-oriented stocks such as banks, consumer goods and property developers.

The market is also anticipating Monday’s release by the Central Statistics Agency’s (BPS) of inflation data for August. The median estimate of five economists surveyed by the Jakarta Globe showed the consumer price index rising 4.74 percent.

In July, the inflation rate was 4.61 percent, with the month-on-month rate at 0.67 percent.

“Inflation doesn’t seem to be a threat because the month-on-month inflation is predicted to be between 0.75 percent and 1 percent,” Edwin said, “So, it is within the anticipated range.”

Still, markets remain volatile, some analysts said, because of uncertainty in the long term over the pace of global economic growth.

Ruben Sukatendel, a fund manager at BNI Asset Management, said there was potential for the JCI to open lower because of continuing concern over the financial crisis in Europe the slowdown in US growth.

“My clients are steered into mixed portfolios and we are also advising them to invest in bonds,” he said. “Index and stocks valuations are rather high already.”

BNI Asset Management manages more than Rp 5 trillion ($585 million) in as sets.

Source :
Jakarta Globe, 02 September 2012
http://www.thejakartaglobe.com/business/strong-showing-likely-as-trading-resumes/463089