[BRIGHT INFO] "A Cup of Tea"

Good day to you.
US stocks closed mostly higher Wednesday after the Fed said the economy was on the mend and orders for big-ticket manufactured items posted an unexpected increase. Although DJIA fell modestly, the broader market measures ended the day with gains. The central bank's decision to leave its key lending rate at a low of zero to 0.25 % was anticipated. DJIA fell 0.3 %, S&P 500 index rose 0.7 %, Nasdaq composite index rose 1.6 %.

Major Southeast Asian stock markets rose on Wednesday, ending two days of falls, with financials and energy heavyweights leading the way ahead of news from a U.S. Federal Reserve policy meeting. Indonesia leads regional gains, jumping 4.3 %.

The market surge to bargain-hunting but said that concern over the outlook for the global economic recovery would continue to keep markets in check.

STI climbed 2.4 %, SETI rose 2 %, JCI jumped 4.3 % after a combined fall of around 4 % over two days, boosted by gains in energy-related and banking stocks.

Crude oil for August delivery fell 57 cents, or 0.8 percent, to settle at $68.67 a barrel. Tin rose 1.1 % to $14,750 a ton. Nickel climbed 6.1 % to $15,500 a ton. PALM oil futures yesterday tracked crude oil and soybeans lower on concern the global recession will slow demand for its use in food and fuel applications. Palm oil for September shed as much as 2.4 per cent to RM2,231 a ton.

After surge 4.3 % JCI still have room for upside. Strongest rupiah will support the market and some fund will maintain sentiment for window dressing at the end of June. We put range trading for JCI at range 1970-2035 index for today.

Commodity, especially on metal and energy will be a trigger for today. After Nickel surge 6.1% INCO and ANTM will be get positive issue. Top Pick still on TLKM for defensive stock, ANTM, INCO, TINS, PGAS, BUMI, BNBR, DEWA, ASII, BMRI, BDMN and BBRI.

We are maintain positive for our market with JCI target still at 2187.5 point index for year end.

“Planning for Growth”

[Personal Opinion ]
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DISCLAIMER: This report is issued by [BRIGHT INFO]. Although the contents of this document may represent the opinion of [BRIGHT INFO]. We cannot guarantee its accuracy and completeness.

Reuters Dow slips, Nasdaq up after Fed, Oracle

NEW YORK (Reuters) - The Dow fell for the fourth day and other indexes ended well off the day's highs on Wednesday after the Federal Reserve reiterated concerns about the economic outlook at the end of its policy meeting.

Technology shares sustained some strength, bolstered by stronger-than-expected quarterly results from software maker Oracle Corp (ORCL.O).

The Fed, as expected, left the benchmark fed funds rate at almost zero. The bond market sold off on disappointment that the Fed did not announce an acceleration or increase of its purchases of Treasury and mortgage-related debt.

Stocks also pulled back, as the Fed did not suggest in its statement that it sees any notable recovery any time soon.

"The Fed is a little more downbeat than the market has been ... that they're emphasizing the weakness is a touch disappointing to me and to the markets," said Jim Awad, managing director at Zephyr Management in New York.

Before the release of the Fed's statement, all three major stock indexes were solidly higher, with the Nasdaq up more than 2 percent. Investors were encouraged by a stronger-than-expected report on monthly durable goods orders, which pointed to increased economic demand.

The Fed's words on the economic outlook were mixed. The central bank said the economy was likely to remain weak for a time, but the contraction's pace was slowing.

The Dow Jones industrial average .DJI was down 23.05 points, or 0.28 percent, at 8,299.86. But the Standard & Poor's 500 Index .SPX was up 5.84 points, or 0.65 percent, at 900.94. The Nasdaq Composite Index .IXIC was up 27.42 points, or 1.55 percent, at 1,792.34. more...

Bloomberg Fed Keeps Purchases Unchanged; Says Recession Easing

June 24 (Bloomberg) -- The Federal Reserve refrained from increasing its $1.75 trillion bond-purchase program, said the pace of economic contraction is slowing and predicted inflation will remain “subdued for some time.”

“Substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time,” the Federal Open Market Committee said in a statement after a two-day meeting in Washington where it also kept the benchmark interest rate between zero and 0.25 percent. The rate will stay at “exceptionally low levels” for an “extended period.”

Chairman Ben S. Bernanke is watching to see how quickly the economy can recover from the deepest recession in five decades: Orders for durable goods unexpectedly rose in May, a government report showed today, while unemployment continues to climb. The Fed also wants to quell concerns that the $1 trillion expansion in its balance sheet will fuel inflation, pushing bond yields higher and crippling any rebound in the economy.

“The Fed wants to be clear they are not raising rates anytime soon,” said John Silvia, chief economist at Wachovia Corp. and a former economist in Congress. “They are leaving their options open. The plan is to stay the course at this point in time.”

The Fed said “the pace of economic contraction is slowing” and noted “conditions in financial markets have generally improved.” The central bank added that it “is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.” more...

CNBC More Signs of a Slow Recovery Fuel Worries of Market Pullback

More signs that the US economy is making a slow recovery are fueling worries that a market correction is in the works.

The Federal Reserve's decision Wednesday to keep interest rates low because of the weak economy took the air out of a stock market rally and heightened concerns that some of Fed Chairman Ben Bernanke's "green shoots" were turning brown.

While no one is putting forth any doomsday scenarios—calling the low in March still seems a safe bet—the idea of a substantial summer pullback is gaining momentum.

Buffett Tells CNBC: Economy In Shambles
"Slow growth and higher taxes—that's not a recipe for higher stocks," says Michael Pento, chief economist for Global Delta Advisors in Parsipanny, N.J. "The threat of a deflationary spiral is looking pretty good for now and that's what spooked the market.

The dour signs for the economy have been piling up lately. The White House on Monday conceded that 10 percent or worse unemployment is fairly inevitable, while the World Bank earlier that day predicted slow global growth.

At the same time, talk has accelerated for a Fed exit strategy from its onslaught of money easing and other liquidity measures. On top of all that, the Mortgage Bankers Association predicted far fewer originations this year than originally thought, and the National Association of Realtors said existing home sales in May gained less than expected, which was followed by a report that new home sales had unexpectedly decreased. more...

Associated Press Recession may be near bottom, new data suggest

Manufacturing data show recession near bottom; drop in new home sales signals slow recovery

WASHINGTON (AP) -- New signals the recession could be nearing a bottom emerged Wednesday in figures showing that orders to U.S. factories surged last month for everything from computers to aircraft and that a gauge of business investment rose by the most in nearly five years.

Still, an unexpected drop in new-home sales in May made clear that any rebound in the housing market, and the broader economy, likely will be long and slow.

Economists said the two reports showed an economy no longer in free-fall but still unable to mount a sustained recovery from the longest recession since World War II.

Hours after the Commerce Department figures were released, policymakers at the Federal Reserve decided to leave a key interest rate unchanged at a record low between zero and 0.25 percent, where it has been since December. Wrapping up a two-day meeting, the central bank repeated a pledge to leave rates low "for an extended period" to give the weak economy time to heal.

Though energy and other commodity prices have risen recently, the Fed said inflation will remain "subdued for some time." But Fed policymakers offered no new assurances that they would step up their purchases of government bonds and mortgage securities to try to drive down rates on consumer debt. That rattled bond investors who fear the prospect of higher interest rates. So did the Fed's observation that commodity prices are rising.

The mention of higher prices hit the Treasury market because the value of returns on fixed-income investments can erode quickly if inflation occurs. Stocks also fell after the Fed's announcement. The Dow Jones industrial average closed down 23 points at 8,299.86. Broader stock averages ended the day higher, though.

The 1.8 percent increase in durable goods orders in May was far better than the 0.6 percent decline that economists expected. It matched the rise in April, with both months posting the best performance since December 2007, when the recession began. more...

Reuters Fed holds policy steady, less worried on deflation

WASHINGTON (Reuters) - The Federal Reserve on Wednesday stuck to its huge program of buying government and mortgage debt and said it saw signs that the deep U.S. recession was easing.

The Fed -- the U.S. central bank -- kept interest rates at nearly zero and signaled less concern on deflation.

It also said inflation would "remain subdued for some time" and provided no hint on an imminent exit from bold policy easing, despite fears among investors the huge U.S. stimulus could stoke prices.

Concluding a two-day meeting, the Fed said it had decided to hold overnight interest rates in a zero to 0.25 percent range -- the level reached in December -- and repeated that they would likely stay unusually low for some time.

The Dow Jones industrial average stock index fell on the news as the Fed's caution that the economy would remain weak for a time dampened hopes for a faster rebound. Economists say this means rates will be on hold until well into 2010.

"The Fed is highly likely to hold short rates at rock-bottom levels until the volume of economic 'slack' ... is substantially lessened, which means short rates are unlikely to rise any time soon," Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut, wrote in a client note.

The dollar extended gains against the euro and the yen while prices on U.S. government debt fell in disappointment that the Fed did not increase its purchases of longer-dated Treasuries. more...

Bloomberg Crude, Gasoline Fall on Bigger-Than-Forecast Fuel Supply Gain

June 24 (Bloomberg) -- Crude oil and gasoline fell after a government report showed that fuel supplies climbed more than forecast as refineries increased operating rates.

Gasoline inventories rose 3.87 million barrels to 208.9 million last week. Stockpiles were forecast to increase by 1 million barrels, according to a Bloomberg News survey. Refineries operated at the highest rates this year and fuel demand fell 5.5 percent, the biggest drop since January.

“The refineries are definitely ramping it up, which is reflected in the product builds we’ve had in recent weeks,” said Justin Fohsz, a broker at Starsupply Petroleum, a division of GFI Group Inc. in Englewood, New Jersey. “The increase in fuel supplies is going to weigh on the crude oil market.”

Crude oil for August delivery fell 57 cents, or 0.8 percent, to settle at $68.67 a barrel at 2:45 p.m. on the New York Mercantile Exchange. Futures, up 54 percent this year, have declined 6.2 percent from a seven-month high of $73.23 reached on June 11.

Gasoline for July delivery dropped 5.07 cents, or 2.7 percent, to end the session at $1.8425 a gallon in New York. It was the lowest settlement since May 22.

Supplies of distillate fuel, a category that includes heating oil and diesel, rose 2.08 million barrels to 152.1 million, the highest since January 1999. A 850,000-barrel gain was forecast, according to the median of 15 analysts surveyed.

Diesel stockpiles increased 2.18 million barrels to 111.6 million, the highest since at least 1993. more...

Palmoil HQ Crude palm oil futures track oil, soybeans lower

PALM oil futures yesterday tracked crude oil and soybeans lower on concern the global recession will slow demand for its use in food and fuel applications.

Soybean oil is a substitute for palm oil, and changes in the price can influence trends in the tropical commodity. The World Bank has said the global recession this year will be deeper than it predicted in March.

“Crude palm oil price is supported by soybeans” and in the short-term, the “price will slightly decline,” Yohan Setio, a plantation analyst at PT Mandiri Sekuritas in Jakarta, said by telephone.

Palm oil for September shed as much as 2.4 per cent to RM2,231 a ton on the Malaysia Derivatives Exchange. It traded 1.3 per cent lower at RM2,257 at the 12.30 pm local time break.

The world economy will contract 2.9 per cent, more than a previous forecast of minus 1.7 per cent, the Washington-based World Bank said on June 22. It cut next year’s growth forecast to 2 per cent from 2.3 per cent.

Vegetable oils, mostly for cooking, can also be used as alternative fuels when fossil fuels are deemed too costly.

Crude oil in New York dropped as much as 1.7 per cent to US$68.06 a barrel in Asian trading, compared to the year’s high of US$73.23 reached June 11. It was down 0.9 per cent at US$68.63 at 2.29 pm Singapore time.

Analysts including Nirgunan Tiruchelvam of Royal Bank of Scotland Asia Securities (Singapore). say US$70 a barrel of crude oil is a support for palm oil.

Soybean futures in Chicago for November delivery dropped as much as 1 per cent to US$9.95 a bushel before trading at US$9.985 a bushel at 2.33 pm Singapore time in after-hours trading.

Chicago soybean oil for July delivery plunged as much as 2.1 per cent to 36.15 cents a pound, and was down 1.4 per cent at 36.40 cents at 2:34 pm. It is the most consumed edible oil after palm oil.

Yesterday, Vale SA, the world’s largest iron-ore producer, said it will invest US$305 million to produce biodiesel using palm oil for its operations in northern Brazil. The biodiesel will be produced by a venture between Vale and Biopalma da Amazonia SA, Rio de Janeiro-based Vale said.

Palm oil prices may come under pressure in the coming months, Setio said. “Over the next one to two months, crude palm oil price will decline because of the supply outlook,” he said. “In the second half, plantations produce more than in the first half.”

Indonesia and Malaysia are the largest producers of the tropical oil. About 55 per cent of annual output comes in the second half.

Danareksa Aneka Tambang (ANTM IJ, Rp1,850 BUY ) A Golden Year for ANTM

55.4% potential upside
Using DCF with a WACC of 13.3%, we arrive at a target price of Rp2,875. The shares currently trade at 09F/10F PE of 28.1x/8.4x, offering 55.4% potential upside. BUY.

A shift to gold
ANTM’s gold business is taking off. Accounting for a mere 25.2% of the company’s total revenues in 1Q08, the proportion of gold sales rose to an astonishing 79.9% in 1Q09 as nickel production continued its deep decline. For 2009F, we expect ANTM’s revenues from its gold business to reach Rp5,926bn, or 66% of its total revenues.

Margins to rebound in 2010
Margins will be lower in 2009, dragged down by gold trading activities which have a low profit margin. In 2010, however, overall margins should improve dramatically on the back of an 87% expected surge in nickel revenues. This should boost the 2010F net margin to 19.1% from 6.4% in 2009F.

Brighter outlook for nickel prices
We are increasingly upbeat on a recovery in nickel prices. Prices have already come down significantly and there is now the potential for recovery given steady declines in nickel inventory on the London Metal Exchange (LME) since early May 2009. Given this newfound optimism we raise our 09F ASP estimate for nickel to US$14,000/ton (from $12,000/ton previously) and our 10F ASP estimate to US$24,350/ton (from US$15,000/ton previously).

Credit Suisse - Asia Palm Oil Sector Update

Watch out for 30 June USDA report – soy planting is expected to be significantly higher

● Year-to-date, palm oil prices have peaked at RM2,880/tonne (t) in mid-May to current levels of about RM2,300/t.
● Negatives for vegetable oil prices: 1) Germany will cut 2009 biodiesel blending target to 5.25% from 6.25% originally intended; 2) speakers in 2009 Indonesia Palm Oil Conference expect palm oil prices to decline to US$550-600/t; 3) vegetable oil inventories at Indian ports hit an all-time high; and 4) 30 June USDA report on actual soy plantings will show a higher area than the intentions report.
● Positive for vegetable oil prices is Oil World projects the stock-touse ratio for global 17 oils and fats will decline to 10.3% in the 2009/10 season versus 10.4% in the current 2008/09 season.
● We remain bearish on palm oil, as we expect supply to recover (reversal of tree stress, seasonally high production) while exports to wane (exports to India unsustainable, restocking is over).

Maintain UNDERWEIGHT on Malaysian palm oil stocks and OVERWEIGHT on Indonesian palm oil players. El Nino is the wild card.

Negatives for vegetable oil prices
● Germany's lower house of parliament approved the government’s proposal to cut 2009 blending target to 5.25% from the 6.25% originally intended. It overturned a decision by the upper house, which blocked the government’s proposal because of fears they would harm investments in the German biofuel industry. (Reuters).
● Speakers in 2009 Indonesia Palm Oil and Price Outlook Conference in Bali believe that palm oil prices will decline to an average of US$550-600/mn t compared with the recent peak of US$760/mn t. (The Jakarta Post).
● India's soyoil imports surged recently. India abolished a duty of 20% on crude soyoil in March 2009 (purchases made then are now arriving at ports). India's share of soyoil is likely to be sharply higher and this will reduce palm oil's market share, which averaged 83% during November 2008-May 2009 period. Vegetable oil inventories at Indian ports hit an all-time high of around 0.8 mn in early June and coupled with weakening local demand had caused 10-20% of shipments to be postponed to
later months. (DJ).
● Weather conditions in the US improved. As of June 15, soybeans were rated good to excellent on 66% of the acreage (versus 56% a year ago). It is expected that June 30 USDA report on actual soy plantings will show a considerably higher area than the intentions report. (Oil World).

Positive for vegetable oil prices
● Oil World is projecting that the stock-to-use ratio for global 17 oils and fats will decline to 10.3% in the 2009/10 season versus the 10.4% in the current 2008/09 season. Soybean supply will be ample in 2009/10, particularly in the second half of the 2009/10 season, but soy is primarily a “meal seed” and will not be able to replenish low edible oil inventories. Oil World projects palm oil price will average 15% YoY higher at US$800/t C.I.F. during July 2009 to June 2010 (or about RM2,600 F.O.B).
● Mission Newenergy has commissioned its new biodiesel refinery in Malaysia which will triple its capacity to 350,000 tonnes. (AUX).
● Palm oil output growth in Malaysia will stay weak for the next two years because of an aggressive replanting scheme and hot weather will aggravate yield stress on oil palms, said Sabri Ahmad, Chairman of MPOB. MPOB reduced its 2009 palm oil output forecast by 1.2% to 17.5 mn t. (Reuters).
● A report jointly published by Organization for Economic Cooperation & Development and UN Food & Agricultural Organization said that international food prices will likely remain high during the next decade, although they will probably not hit the
heights that sparked riots last year. Crop prices are expected to be 10-20% higher during the next decade than during the previous 10 years due to higher input prices and biofuel prices. The report also predicts energy costs and erratic weather may make prices more volatile in the future.

CLSA Indo banks, highest ROA in Asia and funding future returns

Nick Cashmore looked at Indonesian banking sector. We are cautious on the near term outlook but the future of Asia's most profitable banking market looks rosy. Take any weakness as an opportunity to accumulate Indo banking stocks.

The reality is that Indonesia's bank ROA is the highest in Asia and these conditions are unlikely to dissipate anytime soon.

We think there are 3 possible explanations for higher ROA for Indo banks:
(1) post 97-98 Asian crisis, Indonesian banks have been focusing on higher margin NON corporate loans. And this includes consumer, micro, and SME

(2) ROA is higher now than pre-Asian crisis because back then banks were focusing on small margin related party lending.

(3) We also suspect that bankers here still remember the 97-98 crisis and have been overly cautious in lending policies and loan pricing, always assuming the worse. With high provision in mind all the time, loan is being priced accordingly (high). But the high NPL fears never materialized so far, resulted in high NIMs for Indo banks.

None of the 3 factors above will change in the near term future, in our view. Consumer, micro, and SME sectors are still very much under-penetrated in Indonesia and this should mean room for growth.

Banks will continue to play an important role in supporting Indonesia's growth rate. Over the past 5 years, banks' LDR rose from 50% to 64%. There might be an issue with future funding shortage. Current rate of growth can't be sustained. Banks will have to boost internal capital generation.

Key points from the report:
*Intermediating growth. Over the past 5 years, total sector assets have grown 69% to US$122bn. Indonesia's GDP doubled over the same period.
*Future funding shortage. Current rate of growth can't be sustained. Slow internal capital generation means banks will need to boost internal capital generation by cutting div, raising capital, and or constraining credit expansion.
*BBCA, BBRI, and BMRI have already reduced payout ratios, BDMN has done the rights issue.
*Highest ROA in Asia, unlikely to dissipate soon.
*Valuations: near term, one SD above the 5-year average.

KimEng AKR Corporindo Recovery signs come into sight

Indicated recovery in 2Q09
Management indicated a recovery in 2Q09 financial performance compared to 1Q09, driven by improvement in petroleum distribution and manufacturing businesses. The main cause is rebounded oil price (US$58.7 per barrel in 2Q09 vs. US$40.61 per barrel in 1Q09), which translates into higher selling price oil price distribution. Meanwhile, sales volume of petroleum distribution also increased. Kalimantan market was the driver for petroleum distribution sales volume growth. In manufacturing, higher sales volume of sorbitol and derivative products was supported by strong demand in domestic market. Overall, the management expects 1H09 results will be announced by end July 2009.

Still main driver: Petroleum distribution and manufacturing business
We expect earnings growth to stay firm on the back of the petroleum distribution and manufacturing divisions. Kalimantan, having major customers in coal mining sector, is expected to be the driver for petroleum distribution. Management expects sales volume in Kalimantan this year to contribute 55% (600,000 Kiloliters) from target sales volume this year of 1,100,000 Kiloliters (up 64% from 652,000 Kiloliter in FY08). Yet, conservatively, we still maintain our sales volume petroleum distribution of 800,000 Kiloliter this year. In manufacturing division, the company is focusing on expanding the capacity of its production plant (derivatives products
and tapioca starch) in Sorini Agro Asia Corp (subsidiary). As a result, sales volume of derivatives and tapioca starch is expected to grow 15% each this year.

Projects still on track
Management said the company is still on track on development of several projects, as follows: 1) Completion of terminal storage tanks in Koja is expected in 4Q09, 2) Expansion in derivative product in Sorini is expected to complete in 4Q09, 3) Expansion in tapioca starch gradually by 45,000ton to 120,000 ton, expected to be finished in 2010. Management budgets capex for the projects of US$90m this year. We see the capex is above our expectation, especially the remaining capex for terminal storage tanks this year of around US$60m vs our expectation at US$50m. However, we are not concerned that higher capex will disturb the company cash flow, as the company obtained loan facilities from International banks to finance terminal storage
tanks’s capex. We expect the new loan will increase the company’s gearing ratio to 1.1x end 2009 from 0.75x in 1Q09.

Retain BUY, with TP at Rp1,030
We are positive on indicated recovery of AKR financial performance in 2Q09 compared to 1Q09, supported by higher price and sales volume of oil distribution, and higher sales volume in Sorini especially in domestic market. However, we still maintain our estimates despite recovery in 2Q09. We are likely to upgrade our estimates if recovery looks stable and sustainable. Therefore, We retain our fair value with TP Rp1,030 (equals to 12.1x 2009 P/E and 8.7x 2010 P/E).

NSB: China GDP set to grow by almost 8% in 2Q09

Power output turnaround in june? national energy bureau reported that power output increased 3.8%yoy during the second 10 days of june vs negative 0.17% in the first 10 days. surprisingly guangdong province was the start performer with 12.3%yoy jump. both export-heavy provinces of jiangsu & zhejiang also reported positive growth of 2.6% & 9.6% respectively. reason cited of course for the turnaround was the jump in industrial output, especially steel & other commodities. nonetheless 2H las yr was a low base for power output as the bohai region scaled down production, especially from heavy industries, ahead of the olympics games. chief beneficiary for turnaround in power output is huadian power (1071 hk) with the highest sensitivity (7.2%) to utilisation rate.

Economy
NSB: China GDP set to grow by almost 8% in 2Q09
China's economy, which has hit the bottom in this recession, may grow by nearly 8% in 2Q09, said an analyst of the National Bureau of Statistics yesterday. "China's economy has shown signs of rebound," Guo Tongxin said in an article published on the bureau's Website. "Judging from the data, the bottom in this recession should have been touched in the fourth quarter of last year or the first quarter of this year." (Shanghai Daily)

JPM - The art of the graceful exit

Even as the Fed remains low for long, policymakers will keep one eye on exit strategies. Even as the FOMC contemplates further increases in the size of the Fed balance sheet, careful attention will be paid to considerations of what is being called the exit strategy. While there is no authoritative definition of what is meant by the term, it can be taken to loosely mean, first, the steps needed to back away from unconventional policy, and second, the process by which the Fed returns to overnight interest-rate management as the principal tool of monetary policy. Each step taken to back away from providing unconventional support will constitute a de facto tightening of monetary policy

Ending liquidity programs is simple, though potentially painful; precise Fed control over the funds rates may be more difficult

Even with no further reserve tools, the Fed has powerful weapons to raise rates, in the unlikely event that this soon proves necessary. The basic idea behind using interest on reserves as an exit tool is to have the IOR rate serve as the Fed’s effective policy rate. In principle, banks would never lend out reserve balances at a rate below the IOR rate because they would be losing money on the trade relative to just leaving balances at the Fed and earning the IOR rate. The FOMC has stated an intention to keep rates low “for an extended period.” Now that the economy has moved from free-fall to controlled descent, the question of what an “extended period” means is becoming more interesting. Over the last 15 years, the dominant paradigm for understanding monetary policy has been interest rate rules and, in particular, the Taylor rule. In its simplest form, the Taylor rule says that the fed funds rate is set in response to deviations of inflation from a target inflation rate and of output from its full-employment, or potential, level.

UOBKH Indonesia (24June): Election is only two weeks away, weakness = opportunity to buy Indonesia

The USD weakening should be positive for Asia/Indonesia, oil/commodity, but all eyes will be on Fed meeting tonight so sentiment. The Reuters/Jefferies CRB Index gained 1.5 percent in New York yesterday, snapping its two-day, 4.2 percent decline. I know sentiment in the regional market has been jittery lately, but this correction in the market is a good opportunity for those who wants to increase weighting in Indonesia. Reminder that the Presidential election on July 8, is only two weeks from now and SBY is still the likely winner! Various surveys show incumbent President SBY has between 50-70% vote thus it is still very llikely that there will only be one round of election (unless SBY gets less than 50% vote, then the top 2 candidate will go to the second round of election).

So this is the best time to position for the next 5 years of stable politics in Indonesia. President SBY's first term was focused on fighting corruption, reforming the government and the legal system (both justice department and law enforcement). His second term, if he is elected, will focus on "DEVELOPMENT". Now that the framework is ready, SBY's second term should see a more aggressive spending on infrastructure and development. His political power is now much stronger than before as his party now controls the largest seat in parliament.

Indonesia with stable politics, resilient economy, declining interest rate and trading at 12.6x trailing 09 PER is looking attractive. Concensus is forecasting 9% EPS growth but more earning upgrades possible coming from CPO and resource sector.

Below is research's TOP PICK for Indonesia

Indopremier CEMENT INDUSTRY

Cement demand is expected to recover in 2H09, on the back of infrastructure project. The sign of domestic demand recovery has been seen since March 2009 which grew by 1% MoM, followed in April 09 enhanced by 6.8% MoM and in May 09 elevated by 7.1% MoM. As such, we upgraded cement sector rating to OVERWEIGHT from NEUTRAL with SMGR as our Top Pick which is backed by strong balance sheet and net cash position, as well as lower in earning multiple compared to the industry.

Domestic and export sales in May raised by 7.1% MoM and 64.1% MoM
In May 2009, Indonesia cement sales continued to rise either for domestic or export. According to Indonesia Cement Association (ICA), domestic sales grew by 7.1% MoM in May 2009 attained to 3.05 million tones, higher than April 2009 sales. Java was still the driver of May sales which surged by 8.6% MoM reaching 1.69 million tones. Meanwhile, Sulawesi region was the best performer in this period (+18.3% MoM) and became the driver of 5.2% MoM outside Java growth which attained to 1.36 million tones. Export sales in the same period escalated by 64.1% MoM reaching to 502k tones, significantly higher than April Sales (+7.7% MoM). On the other hand, the year to date sales still fell by 11.3% YoY. The 5M09 cement sales contracted by 8.1% YoY for domestic sales and 23.6% YoY for export sales which became to 14.12 million tones and 1.52 million tones, respectively.

SMGR still controlled domestic market share
In term of market share, SMGR still dominated domestic cement industry in 5M09 by 45.8% market share which improved by 160 bps compared to 44.2% market share in the same period last year. Second place was taken by INTP with 29.6% market share which has tumbled by 313 bps compared to the same period last year while SMCB only posted 12.8% market share. INTP and SMCB market share were expropriated by SMGR and others cement player (mainly by Semen Bosowa Maros).

Cartel investigation due to higher cement price
The negative issue in June 2009 for Indonesia cement sector was cartel allegation to SMGR, INTP and SMCB. Cement price in Indonesia is relatively higher compared to other countries. We noted that average cement price increased by 22% YoY and 5% MoM in April 2009, ranging between Rp 55,821 – Rp 57,427 per sack. Currently, The Supervisory Commission of Business Competition (KPPU) is still investigating the alleged cartel in this sector. INTP and SMCB management claimed that such cartel does not exist, since high cement price was due to high fuel cost. Hence, cement price would unlikely to step down this year due to soaring commodities price, in our opinion. Most of the fuel costs, such as coal are based on one year contract.

Assumption changing and upgraded to OVERWEIGHT with SMGR as our top pick
Considering the current market situation, we have evaluated our basic assumption of Risk free rate and Market risk premium in our DCF model became 10.5% and 5.5% from previous 11.8% and 5.45%, respectively. Therefore, our WACC assumption for SMGR, INTP and SMCB are 13.29%, 13.84% and 14.69%, respectively, thus we obtained new target price for our cement valuation universe. We maintain BUY recommendation for SMGR with new TP at Rp 6,730 reflecting 42% upside. Meanwhile, we upgraded BUY recommendation for INTP (TP Rp 8,110) and SMCB (TP Rp 1,230) from HOLD recommendation. Finally, we also upgraded cement sector rating to OVERWEIGHT from NEUTRAL on the back of better cement demand in 2H09 with catalyst of infrastructure project. For this sector, SMGR is still our Top Pick which is backed by its strong balance sheet and net cash position, as well as lower in earning multiple compared to the industry. Downside risk for cement sector are an indefinite delay in infrastructure project such as due to prolong rainy season and festive season, rising energy price and higher raw materials price.

Mandiri Sekuritas Medco Energi: LNG buyer give more time to the consortium (Rp2,750, Neutral, TP: Rp3,700)

Quoting from Bisnis Indonesia, Chubu Electric Power Co and Kansai Electric Power Co (which act as a buyer for LNG) have agreed to give more time for MEDC and Pertamina consortium to further negotiate with the government, in regards to supply gas to DSLNG. The Japanese buyer did not give the exact deadline for the negotiation process.

MEDC believes that there are 3 reasons why the government should agree with the consortium in supplying its gas to DSLNG; 1) the upstream scheme will give out optimum income for the government, 2) around 17% (or 70 mmscfd) of its total production will be allocated to fertilizer plant in Indonesia, and 3) a decent gas selling price of around US$6.2/mmbtu at US$70 oil price and LNG price of around
US$10.9/mmbtu.

Apart from that, PLN’s Planning and Technology Director announced that they have not agreed the selling price of geothermal with MEDC yet. Previously there was news which stated that PT Perusahaan Listrik Negara has agreed the selling price of geothermal power plant in Sarulla of US$6 cents per kWH (30% upward adjustment from previously US$4.6 cents). As MEDC is currently still in a negotiation process with
PLN, we therefore have not factored in future income from this project in our forecast. Thus project realization will provide an upside to our current valuation.

The construction will be in 3 phases over the next 5 years, and the project will start up 2012. Assuming the plant running at its full capacity of 330MW thus, MEDC may obtain an extra income of around US$170mn per year. The company announced that they will out dividend around US$50mn or Rp157/share (assuming Rp10,500/US$). It reflects a divided yield of 5.7%. MEDC is currently trading at EV/2P of US$1.9/boe,
including its contingent reserves.

CIMB Cement

Sector Note - More than it is cracked up to be?

We maintain our OVERWEIGHT stance on Indonesia's cement sector as we still see a number of potential earnings catalysts that could justify a further re-rating: 1) steady domestic price, 2) pick-up in exports, 3) more than 7% domestic cement consumption growth in FY10 accompanied by more than 5% price growth, and 4) lower costs in 2H09. We now expect a slight easing of domestic prices in 2H09 (6% decline previously), 6% price growth next year instead of stagnant prices and higher export volumes. Our FY09-11 EPS forecasts are raised by 3-15%. Indocement is our top pick (target price raised 19% to Rp8,350) in view of more earnings catalysts and dividend upside. We upgrade Holcim to OUTPERFORM from Trading Buy while upping our target price to Rp1,100. Semen Gresik is cut to UNDERPERFORM from Outperform as we lower its target price by 13.5% to Rp4,150.

CIMB Dry Bulk Shipping

Sector Note - On the doorstep of a correction?

The substantial rise in the Baltic Dry Index over the past six months, despite global weakness in steel production and electricity demand, has been driven single-handedly by Chinese buying of iron ore and coal, as the freight-inclusive cost of iron ore and coal imports fell below domestic alternatives from the start of 2009. However, the tsunami of imports may be coming to an end. Adding the rise in the fob prices of commodities and the more expensive freight, the cfr prices of imports have now closed the gap with domestic Chinese prices. Furthermore, we expect sequential capacity growth of some 10.2% in 2H, against just 3.1% growth in 1H. These factors could cause the average BDI for 2H09 to be lower than in 1H09. Therefore, we remain UNDERWEIGHT on dry bulk shipping and continue to recommend UNDERPERFORMs throughout our universe. We also downgrade Pacific Basin from Neutral to Underperform.

Erdhika HEXA Bright Shining Star

Raise Our Forecast
We upgrade our revenue forecast 58% on the back of higher ASP (assuming ASP at US$295.000 for FY09), due to large and giant heavy equipment delivery in 2H09. From our latest company visit, we have confirmed that Hexa will deliver 48 giant units to KPC, Newmont and Thiess, in which these equipments have price range around US$2 – 7 million. These giant units would increase ASP, as compared to small excavator which sells around US$90.000 to US$95.000. Management has clarified that 5 giant units are being assembled on KPC site, and and the rest will be dispatched in 2H09. For Newmont this year, Hexa will deliver one excavator with 7 years of Full Maintenance Contract (FMC). The FMC agreement means Hexa would reap US$5 million/year/unit in spare part and service. Another unit is scheduled to dispatch to Newmont in FY10. We expect revenue in 2H09 will significantly improved by these giant units delivery and spare parts sales.

Stil Attractive Valuation
We raised our EPS forecast 120% and 8% for FY09 and FY10, respectively, to reflect substantial increase in revenue and margin. We increase our TP to Rp2750/share (from Rp1310) based on DCF valuation with 13.2% WACC, 3% terminal growth dan 20% margin of safety. This target price offers 19% upside potential and implies 5.5x PE09F, much
lower than UNTR, which is currently trading at 11x PE09F. Maintain BUY.

JPM - Indonesia Weekly Update

Equity capital markets update:
- After three months of straight-line rallies in riskier markets, the recovery trade has entered a consolidation phase. Global stocks recovered on last day of the week (Jun 19), trimming the weekly drop. U.S. stocks rose on Jun 18, snapping a three-day losing streak as reports on jobless claims and manufacturing added to evidence the recession may be near a bottom

- Asian stocks fell for the first week in five as investors weighed the pace of economic recovery against valuations near the highest levels in five years. Commodities producers led the drop amid concerns that demand for raw materials won’t support share-price gains. The MSCI Asia ex-Japan ended the week at 316.9, 4.8% down

- JCI lost 4.8% last week closing at 1,990.5

Indonesia - market themes and outlook:
- Indonesia's rupiah had its biggest weekly drop since November, as waning confidence in a global economic recovery curbed demand for riskier assets

- The value of Indonesia's exports may contract 20% this year even after a "bottoming out" in the decline in overseas shipments, Trade Minister Mari Pangestu said. Export volumes may fall between 5-10% in 2009

- Indonesian Finance Minister Sri Mulyani said the country's debt ratio against its GDP has continued to decline in the past five years and is now even lower than those of advanced states

Barclays - Feeding the Dragon

China’s May commodity trade data show a slightly more diverse set of developments compared with the across-the-board strength seen earlier this year. In particular, there has been a modest pull back in imports of some key commodities including iron ore and soybeans, reflecting, in our view, an end to some of the aggressive stock-building, both private and government sponsored, that has helped support import demand growth so far this year. We suspect that other commodities where these factors have also been important, notably the base metals and especially copper, are also set for a period of lower import levels in the months ahead.

In energy markets, imports were very strong in May. A notable development was further very strong growth in China's coal imports, setting a record high at 9.4mn tonnes. Net crude oil imports also stayed strong, hitting their second highest level ever. To some extent higher coal imports reflect a decline in local supplies because of low prices, whilst in oil high levels of refined product exports somewhat offset the strong crude oil import numbers. Overall, however, the trade figures still support a view of rising energy demand in China.

The move in copper and nickel imports to all-time highs may represent a 2009 peak, in our view, as restocking in these sectors is well advanced and local price premiums no longer support arbitrage trade. Strong palladium imports are mainly a reflection of the recent strength of the domestic auto sector and are likely to continue as long as sales keep growing. Finally in cotton a third consecutive month of growth in imports is encouraging in light of the dependence of global trade and prices on the needs of China's textile industry.

ING - Eurozone Economic Update

The Eurozone economy is showing signs of stabilisation, but a return to positive growth might have to wait until 2010. Further unfolding of government stimulus, combined with the ECB’s aggressive monetary easing, should help to stabilise the economy further. With the output gap widening further until 2011, there is no need for the ECB to seriously consider an early exit strategy.

Will there be a crisis after the crisis? Regional imbalances have laid the foundations for significant ‘overleveraging’ of several high-growth countries. Household and corporate indebtedness has increased over the past ten years, more than offsetting improved financial and non-financial wealth. Once the dust of the first phase of the recession has settled, the correction of regional imbalances could become the real challenge for the Eurozone economy. We believe adjustment and restructuring will impede the Eurozone’s growth engines of the past ten years. Others will have to take over the driving.

The strength of any recovery depends on labour market developments. Eurozone countries are increasingly confronted with the economic and social impact of rising unemployment. In Germany , the labour market could become the dominant issue for the federal electionsin September. In France , the virtues of the social system are at risk as soaring public deficits are limiting the room for fiscal manoeuvre. At the same time, Italy, Spain and Belgium are experiencing an even more dramatic deterioration of public finances. Meanwhile, in The Netherlands, consumers are being squeezed by wealth effects and job insecurity.

CLSA Indonesian consumer, fending off global recession?

Indo’s economy grew fastest in SE Asia in 1Q09 as domestic spending accelerated at its fastest pace since 2000. Household consumption accounts for 64% of GDP and Indonesia’s GDP per capita doubled from 2002 in US$ term.

The immediate outlook for discretionary items still looks weak as companies struggle with a cyclical slowdown. However, Indonesia’s long term characteristic should help the country to deal with current crisis: population growth, urbanization, low per capita consumption, and rising income.

Key points from the report:
· Indonesian economy has been relatively resilient in the current global economic crisis since household consumption accounts for 64% of GDP. Grocery sales were up 7.6% yoy in 1Q09.
· The immediate outlook for discretionary items looks weak as companies still struggle with a cyclical slowdown: weak SSG for Ace (ACES IJ), Ramayana (RALS IJ), and Matahari (MPPA IJ).
· We like basic consumption plays such as Indofood (INDF IJ), Unilever (UNVR IJ), and Gudang Garam (GGRM IJ).
· Key drivers to demand: population growth, urbanization and household formation.

Citigroup Commodity Heap - Coal: The Infrastructure Impact

Supply Restrained — Coal is the world's fastest growing source of energy. Yet seaborne coal trade will be restrained by continuing port and rail constraints on the supply side.

Further Australian Port Problems — NCIG third coal terminal (30mtpa capacity) at Newcastle is scheduled for a planned start-up in March 2010, yet faces delays due to the requirement to dredge harmful materials out of the channel. Further issues remain unresolved in regard to the capacity balancing system. Abbot Point faces delays to expansions plans from 21mtpa to 25mtpa due to the derailment of a ship loader and flooding earlier this year.

Australian Rail Rescheduled — The 31mtpa, $A1bn Northern Missing Link Railway in QLD had been expected to be completed by 2010. However the project is not yet approved and hence unlikely to be completed before 2012. The 30mtpa $A1.1bn Surat Basin Railway Project (Southern Missing Link) is still under feasibility study due for decision in 2009. QLD's privatisation program (QLD rail & Ports) could further put expansions at risk.

South African Port & Rail Setback — RBCT Phase V expansion from 71mtpa to 91mtpa is running behind schedule and has been delayed until Q4 due to equipment issues. Currently the port is operating at ~60mpta below its capacity of 71mtpa due to constraints and derailments on the rail network. It is likely rail will continue to be the constraint after port expansion.

Russian Exports Restricted — Russia's coal reserves are on average ~5000km from ports as such freight costs are high. Port expansions are planned for increased exports (25mpta additional capacity by 2015 for Asia). However rail will likely be the constraints given poor condition and lack of rail stock.

Indonesian Expansions Impacted — Increased utilization of low cal coals is a risk to thermal coal. However Indonesian domestic demand for low cal coals should increase in 2010 as several new power stations are commissioned. A large scale development of coking coal at Maruwai is now less likely given BHPs decision to halt development at Haju (the first stage of Maruwai). We believe infrastructure was the likely issue.

Price Forecasts — We continue to see some downside risks in the short term as Chinese imports of thermal, PCI and coking coal ease in H209. By 2011 we expect demand to normalise and supply side constraints to re-assert themselves. We retain our forecasts of rollover at US$70/t for thermal and US$129/t for coking in JFY10.

Macquarie Regional strategy: Skating on Thinner Ice

MacQ regional strategist Daniel McCormack flags the deterioration in the risk/reward trade-off for Asian equities. Asian markets have enjoyed a very strong run recently, with MSCI Asia ex Japan up 44.7% since the local trough in early March. At 1.7x P/BV, 8.7x P/CF, 16.1x trailing earnings and 15.6x forward earnings, Asia ex Japan is now pricing in fairly rapid recovery in final demand. Indeed, with a long-run forward PER average of 13.1x, markets are effectively saying that analysts’ earnings forecasts are currently 19% too low. Key risks:

1. Restocking has given demand a short-term boost in recent months, with the 2009 earnings growth forecast for Asia ex Japan moving up from -12.7% at the end of March to -4.7% at the end of May. But for this trend to continue, final demand now needs to come through in a meaningful way.

2. The latest news here is disappointing. So far there are no tangible signs of a turnaround, either in the US or Europe . Moreover, the outlook is challenging, with bank credit still very constrained, interest rates and gas prices having moved up appreciably, and US fiscal policy likely to be less of a support to income growth in 2H09. Indeed, there are early signs that the recent positive news flow on earnings may be coming to an end and possibly reversing, with our earnings revisions indicator for Asia ex Japan turning down in recent weeks.

Staying Overweight in Indonesia
Within regional context, Macquarie research re-iterates Overweight stance on Indonesia with an increased country weighting to 1.0 from 0.5 previously. Indonesia offers third-strongest economic growth in the region with a forecast GDP growth of 3.5% in 2009 and 5.5% in 2010, behind only China and India . The market trades on 12.4x forward earnings, or 22% below its long-run average of 15.9x, which is third-cheapest in the region. Key positive catalysts would be the accelerating domestic demand (e.g. strong month in May for motorcycle and automotive unit sales), stable and improving politics (presidential election on 8 July should be peaceful yielding predictable outome), and cheaper and easier financing for the consumers (a strong come back in bank lending appetite). Top five stock picks by Macquarie research are Astra International (10.5x P/E for FY10), BCA (11.3x), Bank Mandiri (10.3x), Indocement (11.1x), and PGAS (9.2x).

CIMB Construction

Sector Note - On the road to recovery

The construction sector is primed for a recovery in 2010, thanks to (1) an uptick in GDP growth from 3.5% in 2009 to 5.0% in 2010, (2) a more conducive lending environment, which will boost demand for private property, (3) increasing government spending on infrastructure, (4) the rollout of projects that were delayed by the upcoming elections and slow demand, (5) a recovery in margins in 2010 as construction companies factor in the final tax structure in their pricing, and (6) stabilising prices for most construction materials. Factoring in the encouraging prospects, we upgrade our sector call from underweight to OVERWEIGHT. Our top pick of the sector is WIKA with target price of Rp400.

Associated Press Asia stocks fall amid fears of more economic gloom

Asian stocks tumble after World Bank projects more economic gloom; Tokyo, HK off 3 pct

HONG KONG (AP) -- Asian stock markets tumbled Tuesday, knocked by heavy losses on Wall Street after the World Bank warned of a sharper contraction in the world economy.

Benchmarks in Tokyo, Hong Kong and elsewhere sank around 3 percent in a broad-based rout as the bank's gloomy forecast undermined hopes of a quicker end to the worst recession in decades. Crude oil prices and the dollar also declined.

Global markets have risen massively since March, with some like Hong Kong up nearly 60 percent, on signs the recession is leveling out.

But the World Bank on the weekend issued new and much more pessimistic forecasts. It expects the world economy will shrink by 2.9 percent and warned that a drop in investment in developing countries will increase poverty. The bank's previous forecast was for a 1.7 percent contraction.

With markets already braced for a sell-off following the springtime rally, the report led investors to take profits. The sharp overnight drop on Wall Street was another catalyst, analysts said.

"The markets have been overbought, and now the correction is beginning," said Peter Lai, investment manager at DBS Vickers in Hong Kong. "Investors are facing the reality again. People fear the liquidity and funds will start flowing out of the markets, so we're seeing profit taking."

Japan's Nikkei 225 stock average lost 283.46, or 2.9 percent, to 9,542.81 while Hong Kong's Hang Seng shed 550.13, or 3.1 percent, to 17,505.68.

South Korea's Kospi lost 2.4 percent, Australia's index was off 3 percent and Taiwan's benchmark dropped 1.9 percent. Shanghai's main stock measure traded lower by 1.4 percent.

U.S. investors, also unnerved by the World Bank report, dragged stocks to their largest declines in two months.

The Dow fell 200.72, or 2.4 percent, to 8,339.01, its lowest finish since May 27.

The Standard & Poor's 500 index fell 28.19, or 3.1 percent, to 893.04, also leaving the index with its biggest slide since April 20 and erasing its advance for the year.

Oil prices fell on expectations demand will remain weak. Benchmark crude for August delivery was down $1.04 at $66.80 in Asian trade.

In currencies, the dollar weakened to 95.21 yen from 95.48 yen. The euro was higher at $1.3861 from $1.3844.

[BRIGHT INFO] "Just a Note"

Good day to you.

Stocks suffered their worst one-day loss in two months. The DJIA dropped 200.72 points, or 2.35 %, to end at 8,339.01. Underscoring worries about the economy's outlook, the World Bank said prospects for the global economy remain "unusually uncertain" as it cut 2009 growth forecasts for most economies.

Most Southeast Asian stock markets fell on Monday. Oil, which fell below $69 on Monday, weighed on regional sentiment while investors were cautiously awaiting guidance on interest rates and the economic outlook from a U.S. Federal Reserve meeting this week, analysts said.

The Thai index lost 1.1 %, Singapore's index inched down 0.3 %, Vietnam fell for a second day, ending down 3.6 %, and The Jakarta index fell 0.8 %.

Crude oil for July delivery fell $2.62 to $66.93 a barrel. Nickel declined 3 % to $14,750 a ton and tin slipped 0.7 % to $14,725 a ton. Crude palm oil futures dropped as much as 5.7 % yesterday to hit a fresh 11-week low as weaker oil prices weighed on global vegetable oil markets.

Indonesian economy is still growing at 4% – 5% rate while other countries in the Southeast Asian region are showing negative growth. JCI trading at 11.25x PE’10 whichis lower than regional peers like Singapore 13.6x PE’10. But if presidential election were extended to two round, we expect turbulence in our market.

Our Market will under pressure for today with support JCI at 1850. Maintain Cash and underweight for short term strategy. Back on fundamental valuation or wait and see.

“Skeptical, aren’t we?”

[Personal Opinion ]
=====================================================================================
DISCLAIMER: This report is issued by [BRIGHT INFO]. Although the contents of this document may represent the opinion of [BRIGHT INFO]. We cannot guarantee its accuracy and completeness.

Reuters S and P turns negative for year in broad sell-off

NEW YORK (Reuters) - Stocks suffered their worst one-day loss in two months, dropping the S&P 500 back into negative territory for the year on Monday in a broad-based sell-off, as investors reconsidered the health of the economy.

Shares of economically sensitive sectors such as financials, energy and materials led the S&P 500's .SPX decline. A sharp drop in U.S. crude oil futures and other commodities hit shares of companies sensitive to those prices, including Exxon Mobil Corp (XOM.N), which lost 3.1 percent to $68.84.

Analysts said investors were keen to sell shares that led the market up in its rally since early March. Major averages have largely been trading sideways in recent weeks and many investors have speculated that more obstacles were in store for stocks.

"The recovery is likely to be anemic by post-war standards," said Hugh Johnson, chief investment officer of Johnson Illington Advisors, in Albany, New York. "The recovery in the economy and earnings is unlikely to be as strong as the rise in stock prices since early March has implied."

Underscoring worries about the economy's outlook, the World Bank said prospects for the global economy remain "unusually uncertain" as it cut 2009 growth forecasts for most economies.

The Dow Jones industrial average .DJI dropped 200.72 points, or 2.35 percent, to end at 8,339.01. The Standard & Poor's 500 Index .SPX was down 28.19 points, or 3.06 percent, at 893.04. The Nasdaq Composite Index .IXIC was down 61.28 points, or 3.35 percent, at 1,766.19.

European shares also slid, with the FTSEurofirst 300 .FTEU3 index of top European shares hitting its lowest closing level since mid-May. more...

Bloomberg Oil, Gasoline Tumble as World Bank Predicts a Deeper Recession

June 22 (Bloomberg) -- Crude oil fell more than $2 a barrel and gasoline tumbled after the World Bank said the global recession will be deeper than forecast, bolstering concern that fuel consumption will remain depressed.

Oil dropped 3.8 percent after the bank projected the world economy will contract 2.9 percent this year, more than its previously forecast decrease of 1.7 percent. Prices also declined as the dollar strengthened, reducing the appeal of commodities as an alternative investment.

“We’re lower because reality is asserting itself,” said Chip Hodge, who oversees a $9 billion natural-resource-company bond portfolio as managing director at MFC Global Investment Management in Boston. “Prices have rallied in anticipation of an economic recovery. Now it looks like the recovery will take longer and be less steep that was previously thought.”

Crude oil for July delivery fell $2.62 to $66.93 a barrel at 2:55 p.m. on the New York Mercantile Exchange, the lowest settlement since June 3. It was the biggest one-day decline since May 15. Prices, up 50 percent this year, have dropped 8.6 percent from a seven-month high of $73.23 reached on June 11.

Futures for July delivery expired today. The more-active August crude oil contract slipped $2.52, or 3.6 percent, to settle at $67.50 a barrel.

Gasoline for July delivery declined 6.47 cents, or 3.4 percent, to end the session at $1.8597 a gallon in New York. It was the lowest settlement since May 26. more...

Palmoil HQ Crude palm oil futures tumble to fresh 11-week low

Malaysian crude palm oil futures dropped as much as 5.7 per cent yesterday to hit a fresh 11-week low as weaker oil prices weighed on global vegetable oil markets.

The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell as much as RM130 to RM2,155 per tonne, a level unseen since April 8.

The decline in the palm oil market was more pronounced compared to soyoil futures on the Chicago Board of Exchange and Dalian Commodity Exchange as there was a lack of fresh orders for the tropical oil, traders said.

“All the major markets, China, India and Pakistan are not issuing new orders. Only European Union countries are capitalising on the low prices for the biofuel sector,” said a trader with a local commodities brokerage.

Cargo surveyor Intertek Testing Services reported smaller declines of 3.4 per cent to 786,591 tonnes in June 1-20 shipments compared to 28.3 per cent slump in June 1-10 period.

Another surveyor, Societe Generale de Surveillance, estimated a fall of 4.1 per cent to 793,934 tonnes from 827,609 tonnes shipped between May 1 and 20.

Associated Press Stocks tumble on bleak outlook for world economy

NEW YORK (AP) -- A surprisingly bleak forecast for the world economy pushed stocks to their biggest loss in two months.

Major stock indexes tumbled by more than 2 percent Monday, sending the Dow Jones industrial average down 201 points, after the World Bank estimated the global economy will shrink 2.9 percent in 2009. It previously predicted a 1.7 percent contraction.

The grim assessment was the latest unwelcome surprise for the market since last month and further eroded hopes that the economy was starting to emerge from recession. Investors began driving stocks sharply higher in early March, encouraged by modest improvements in housing, manufacturing and even unemployment.

The dampened economic outlook from the World Bank, a global lender based in Washington, also weighed on the prices of oil, metals, and other commodities. Those price drops in turn sent energy and metal producers' shares falling.

Hugh Johnson, chief investment officer of Johnson Illington Advisors, said the downbeat economic prediction confirmed fears that have been building in the market for two weeks.

"The forecast by the World Bank just dramatized that the market may have overstated what's coming for the economy," he said.

The stock market is coming off its first weekly loss in more than a month after mixed economic readings last week.

Investors have gone from enjoying a string of better-than-expected economic data to trying to manage a list of worries about the economy. Stocks have lost ground several times in the last month on fears that rising interest rates and inflation would upend an economic recovery.

Many analysts also say the relief that erupted in early March about the economy then led to outsize expectations for how quickly a recovery could occur. Other economic news has hit stocks since May. A disappointing government report last month on retail sales suggested the economy remained fragile, and the Federal Reserve reined in its expectations for how the economy will fare this year. more...

Bloomberg Oil’s Channel Break May Signal End to Rally: Technical Analysis

June 22 (Bloomberg) -- Oil prices moved out of a so-called ascending channel that started in April, signaling crude’s rally may falter.

Crude oil for July delivery fell 2.6 percent to $69.55 a barrel on June 19, the biggest drop for the front-month contract in two weeks. It was the first close outside a channel that’s bounded intraday highs and lows during the last two months, Zug, Switzerland-based consultant Petromatrix GmbH said today.

“The ascending channel was invalidated for the first time and this clearly need to be taken as a negative,” Petromatrix managing director Olivier Jakob said in a note to clients. “The correction on Friday was very severe.”

Prices gained 60 percent from a low of $43.63 on April 21 to reach a seven-month high of $73.23 on June 11. Oil for July fell as much as 1.7 percent to $68.89 a barrel today, the last day of trading for the contract.

Traders will watch today’s close on the more-actively traded August contract to gauge whether prices are set to fall further, Jakob said. A settlement below $70 a barrel would be a bearish signal, he said. It traded at $68.68 a barrel at 11:14 a.m. London time.

Last week, analysts at FuturesTechs.com said a “high- wave” pattern on crude oil’s price chart, where daily opening and closing price are almost the same, signaled prices may fall.

The moving average convergence-divergence, a measure of price momentum, also suggested a reversal in direction, Swiss energy trader Elektrizitaets-Gesellschaft Laufenburg AG said on June 17.

To contact the reporter on this story: Will Kennedy in London at wkennedy3@bloomberg.net.

MPOC CPO futures: It's now a bear market

OBSERVATIONS: The Kuala Lumpur CPO futures market has morphed into a bear.

This it did by decisively penetrating on the downside the RM2,335 a tonne long-term technical support level. The benchmark September 2009 contract plunged last week to a low of RM2,274 before settling last Friday at RM2,285, down a whopping RM180 or 7.30 per cent over the week.

Obviously many market players were running scared, frightened by the recent thick slew of news on bearish developments regarding the fundamentals of the crop.

While the 74,000-tonne increase in end-May 2009 stocks of palm oil to 1.37 million tonnes, as reported by the Malaysian Palm Oil Board (MPOB) was the catalyst for the previous week's price slide, bad news on the export front compounded market players' fears - and probably led to a firming of their conviction - that the end to the January through mid-May 2009 bull run is nigh. More so now that the industry is in the middle of the April-through-September seasonal high production period.

The latest June 1-15 export estimates compounded this market's bearish tone. Societe Generale de Surveillance and Intertek Agri Services' first half June export estimates were 570,187 tonnes and 560,416 tonnes respectively. The total combined estimates of the two export monitors averaged some 565,000 tonnes, down about 61,000 tonnes or 9.80 per cent compared to the average of their estimates for the corresponding period in May.

What's more, market grapevine talk that India has deferred taking delivery of some 70,000 tonnes of palm oil for has fuelled speculation of defaults in export orders.

Weakness in world commodity markets overall, and in crude oil markets in particular, provided a bearish backdrop, adding to the gloom.

Conclusion: The June 1-20 export estimates, which should be public knowledge today, is likely to be the determinant of immediate market direction.

Because of the sharp price tumbles over the past two week, this market is now in an extremely technical oversold position and a technical rebound could be in the offing. However, don't be surprised if it turns out to be a dead-cat bounce.

DBS Kalbe Farma Announced tender offer plan on Enseval Putera Megatrading

(Rec & TP under review; KLBF IJ; Rp1,020)

Kalbe Farma (KLBF) announced its plan to conduct tender offer for 725.24m shares of Enseval Putera Megatrading (EPMT), or equivalent to 31.81% of ownership. EPMT is KLBF’s distribution arms with around c.23.5% revenue contribution in FY08. After tender offer, KLBF will have 90% ownership in EPMT from its current 58.19%. The proposed tender offer price is Rp870/share and this is higher than market prices in the last 90 days prior to the tender offer announcement (21 March 2009 – 18 June 2009). The tender offer will be conducted for 30 days after the official announcement. The process is now pending approval from the capital market authority (Bapepam).

KLBF had reportedly allocated Rp600-700b of internal cash to conduct this tender offer and its cash balance as at 31 March 2009, KLBF stood at Rp1.6tr. EPMT’s latest closing price is Rp820, or 6.1% lower than the proposed tender offer price. We will review our forecast and recommendation on KLBF.

DBS Perusahaan Gas Negara To held AGM on 23 June 2009

(Fully Valued; PGAS IJ; Rp3,000; TP Rp2,603)

The newspaper reported that in the upcoming EGM of Perusahaan Gas Negara (PGAS) to be held on 23 June 2009, the Indonesian Government as the majority shareholder of the company might ask a dividend payout of close to 100% from the company’s FY08 earnings.

The secretary from the State-owned enterprises ministry confirmed that the government was indeed expecting a special dividend from PGAS which will be discussed in the upcoming AGM.

PGAS booked a net profit of Rp633bn in FY08, thus assuming a 100% payout will translate to a dividend payment of c.Rp28/share. Noted that PGAS has a total cash balance of Rp5.4tn as of March 2009.

DBS Cement

Recovery in the offing

• Mortgage rate decline will boost cement demand
• Infrastructure projects will increase demand
• Slowdown in expansion except SMGR
• Top pick: SMGR with TP: Rp6,100

Declining mortgage rate will boost demand for cement. Cement sales fell 8.1% y-o-y in 5M09, however, cement sales should start to recover in 2H09. As some banks have started to offer low rate mortgage and competition in mortgage lending is about to intensify, we believe it will boost property and cement sales. Mortgage lending is one of the easiest ways to boost lending by the banking sector on the back of simple credit screening and certainty of collateral value.

Infrastructure projects will increase demand. We have seen the positive impacts from the government’s stimulus infrastructure developments. As such, cement demand from these projects will add to that from property private projects. The upcoming infrastructure and toll road projects with estimated investment value of US$15bn should become the main driver for cement demand.

Slow down in expansion except SMGR. The recent financial turmoil, rising cost of funds and slowdown in demand have pushed some cement companies to scale down capex or delay expansion plans. INTP chose to delay construction of a new kiln plan. However, SMGR that has run at above 90% will continue with its expansion plan given its strong balance sheet and financial back up. As such, we believe that SMGR will be able to capitalize the fast growing demand in 2011 and maintain its leadership position. Also, the new Tonasa plant should benefit from strong growth in eastern part of Indonesia .

Upgrade TPs: We upgrade our earnings forecast on INTP by 38% in 2009 and 23% in 2010 while maintaining our forecast on SMGR. Both companies showed favourable 1Q09 results driven by improvement in efficiency. We also rollover our valuation from FY09 to FY10 and lower our risk free and ERP assumptions to 9.5% and 5%, respectively. As such, we raised TP of SMGR to Rp6,100 at US$165EV/ton and INTP to Rp8,900 at US$167EV/ton. SMGR is our top pick on the back of its competitive advantage as it has geographically diversified production facilities.

CIMB Media Nusantara Citra Company update - Good news already programmed in

(MNCN IJ / MNCN.JK, NEUTRAL - Maintained, Rp310 - Tgt. Rp295, Media)

While we believe the media sector's pulse will remain subdued this year, MNC is showing an improving relative performance that warrants an EPS ugrade. Singapore's MediaCorp which currently holds a 7% stake appears to be keen on upping its stake. Although it is positive, we think that the impact might not be significant as a majority stake is unlikely due to the 20% cap on foreign ownership. As a result of the EPS upgrade and adjustment of the WACC from 15.6% to 15.1%, we adjust our target price from Rp159 to Rp295. However, we maintain our NEUTRAL rating as most of the upside is already priced in.

CLSA mortgage war kicks off, back by popular demand.

In our recent property note, we wrote that BCA (BBCA IJ) was about to launch a new mortgage product of sub 10%. Now mid-size bank Panin (PNBN IJ) has just beaten BBCA to the high ground with a new, unsubsidized, mortgage rate of 8.8%. Just 6 months ago, mortgage rates were 15%.

I think property buyers will snap this offers up. In our view, it is unlikely that Indonesians will sit and wait for lower mortgage rates. Anything single digit sounds good enough. In the historical context, mortgage rates less than 10% are already very low.

This is Ground Zero for Indonesia’s housing rally. Mortgage lending is only 3% of GDP, significantly below peers and only 1% of Indonesian households have a mortgage loan.

What happened in 2007 when banks got into the mortgage war?
A home buying frenzy, with mortgage growth accelerated from 22% to 37% YoY, current mortgage growth is about 24% YoY.
Property marketing sales jumped 82% YoY. Cement demand +11.5% nationwide, the fastest growth in over a decade.

And what happened to property stock prices back then in 2007?
Stock prices went up between 9-45% in the 3 months after the mortgage deals were announced.
Stocks that will benefit from a new mortgage war include: property companies (CTRA, SMRA, ASRI, CTRS, BSDE, and ELTY) and cement companies (INTP, SMGR, and SMCB).

Mandiri Sekuritas FOCUS (19-Jun-2009) KLBF: Tender offer impact

Kalbe Farma (KLBF) today announced a tender offer plan to acquire 31.8% stake in Enseval Putra Megatrading (EPMT), which will bring KLBF’s ownership at EPMT to 90.0% post-tender offer. We believe this is a good move as EPMT’s performance has been improving and around 90% of KLBF’s minority interest was derived from EPMT’s bottom-line. Yet, the impact on KLBF for this year will be minimal as only maximum 5 months of EPMT’s net profit will be taken into account. We maintain our buy recommendation on the counter.

Around 90% of KLBF’s minority interest was derived from EPMT… Our recent talk with KLBF’s management revealed that around 90% of KLBF’s minority interest was derived from EPMT’s bottom line. In 1Q09 for instance, of the total Rp77.2bn net profit recorded by EPMT, KLBF could only recognize 58.2% of it, in line with its ownership. While the remaining belongs to minority shareholders. This was equivalent to Rp32.2bn of net profit or representing 93% of KLBF’s minority interest for the quarter.

.. whose performance has been consistently improving. In 1Q09, EPMT recorded a 17.7% yoy increase in sales and 37.0% yoy in net profit, higher than KLBF’s 14.1% yoy and 24.0% yoy, respectively. At KLBF, revenue from distribution division accounted for 25% of the company’s total revenue and its gross margin has showed a significant improvement in 1Q09 due to increasing contribution from trading (from 12.5% in 1Q08 to 17.3% in 1Q09). We expect such margin to continue improving to 17.8% for FY0! 9.

Additional EPS of Rp4/share for FY09. Even though we view positively this acquisition, the impact would be minimal for KLBF’s performance this year. Based on consensus estimates for EPMT’s net profit of Rp305 bn this year, we estimate a Rp41bn reduction in minority interest for KLBF (assuming only 5 months effective impact), thus translating into additional EPS of Rp4/share. At the current price, KLBF offers 14.3% potential upside based on the new target price. Mai! ntain buy

UOB Kay Hian - B A K R I E L A N D D E V E L O P M E N T Keeping Its Eyes On The Prize

Well-positioned to benefit from a pick-up in property sales in 2H09. We believe the low interest rate and eagerness of banks to be more aggressive in mortgage lending will spur growth in the property market starting 2H09. As of Jun 09, the central bank has cut the SBI reference rate by 250bp from its peak to 7%. Thus, we expect the lending rate to follow suit.

Mortgage rate is currently being offered at 12-13% p.a., down from 15-16% at end-08. Unlocking the property value. We estimate revenue growth of 27% and 44% respectively for Bakrieland (BLD) in FY09-10, mainly driven by the completion of Bakrie Tower, Lifestyle Centre, Pullman Legian Bali and the toll road projects. BLD is currently considering an option to divest or list its stake in the toll road projects. The Group also plans to sell 30% of its stake in the Jakarta Central Business District (CBD) assets to raise cash.

Ripple effect from toll road arm. We like BLD's synergy with its toll road subsidiary as it has proven its capability to deliver the project efficiently. The toll roads also provide recurring revenue to BLD, acting as a buffer to the property sector's downturn. Kanci-Pejagan, the first toll road project for Bakrie Toll Road, will commence operation by Sep 09.

We estimate it will contribute 4% and 12% respectively to its FY09-10 revenue, and 18% to our FY09 RNAV. Strategic partner to strengthen corporate governance. The involvement of US-based asset management company Avenue Capital Group (ACG) by holding 31% stake in BLD should mitigate its corporate governance risk. BLD has also divested 30% of its stake in Rasuna Epicentrum to Limitless LLC, which we believe could enhance project management. Limitless LLC, a subsidiary of Dubai World, is a real estate investment company with a global track record.

BLD trades at 54% discount to FY09 RNAV. We initiate coverage on BLD with BUY recommendation. Being the most liquid property stock, BLD is an attractive play on the expected pick-up in the property market. Our valuation is based on revalued net asset value (RNAV) estimate. We arrived at RNAV of Rp689 and then apply a 36% discount to obtain our target price of Rp440 (+40% upside to the current price).

Mandiri Sekuritas Adaro: Green Signal (ADRO,Rp1,180, Buy, TP: Rp1,400)

Reduction in WACC. We have reduced our WACC estimate from 16.4% to 9.9% as a result of lower risk-free rate assumption and market risk premium given better market condition. The benefit of lower WACC has however been partially offset by lower exchange rate. We keep our key assumptions constant, aside from fine-tuning our long term production numbers and increasing our fuel price. After composite adjustments, our DCF derived equity value rises from Rp1,150/share to Rp1,400/share.

Re-negotiation is only a short-term benefit. ADRO renegotiated rices for coal sold under legacy contract in FY09 but as the price increase upset ADRO’s customers, ADRO will recoup this short-term gain in later years by adjusting prices of long-term contracts accordingly.

Orchard Maritime (OML) acquisition should be beneficial. ADRO has acquired OML, which is a coal barging company and its affiliate. Acquisition is not cheap yet fair as the acquisition price of US$78.5mn implies about 5-6x Enterprise’s liabilities are however not less, with outstanding debt of US$135mn. The benefit of the acquisition includes amongst others - 1) Other income from selling extra barging service and transshipment service in the spot market 2) Lower demurrage cost.

Production at Wara mine to stream-line. ADRO has signed three new contracts out of which one contract relates to Wara coal (about 3900kcal), implying that production at wara mine will soon stream-line and that its ASP will lower in future.

Buy call. Our TP of Rp1,400/share implies PER09F of 10.4x and EV/Reserves of 4.8x. Its 18.6% upside to current price so we maintain our Buy call.

Mandiri Sekuritas Bayan: Red Signal (BYAN, Rp5,650, Sell, TP: Rp2,100)

We have downgraded our WACC estimate drastically from 16.4% to 9.6%, taking into account the reductions in (1) risk-free rate assumption from 11.0% to 6.2% (2) Market risk premium from 7.2% to 5% and (3) Beta estimate of 1.4x to 1.1x.

The benefit of lower WACC has however been offset by our lower exchange rate assumption. Besides this, we also fine-tune our assumptions for production and fuel rate. After all changes, our DCFderived target price fell from Rp2,400/share to Rp2,100/share.

Market has seen a rally in last 2 months with JCI up by about 50%ytd, but BYAN’s share price outperformed the market, rising by 511%ytd. As our DCF-derived target price is 62.8% lower than the current price, we affirm our Sell call on BYAN.

Long term catalyst for the stock is the BYAN plans to upgrade majority of its coal from 4,217 kcal coal to 6,263 kcal. However, in the absence of complete information we have not considered the impact of upgradation in our DCF derived target price.

Bloomberg Emerging-Market Stocks Will Advance 32%, Garner Says

June 19 (Bloomberg) -- Developing-nation stocks may rise 32 percent in the next 12 months as a faster-than-expected earnings recovery fuels a long-term bull market, Morgan Stanley said.

The MSCI Emerging Markets Index may climb to 985 by June 2010 from its closing price of 743.72 yesterday, Jonathan Garner, Morgan Stanley’s chief Asian and emerging-market strategist, wrote in a research note. Profits will rebound 28 percent next year after a 15 percent slide in 2009, Garner wrote. That compares with his earlier forecast for a 20 percent gain in 2010 and a 25 percent drop this year.

The London-based strategist still reduced his recommended allocation to developing-nation equities, saying he’s “tactically cautious” because the global economic recovery may stall. The MSCI gauge may slide as much as 33 percent from its 2009 high during the next three months as weaker economic data from China and the U.S. spark a “correction,” Garner wrote.

“We continue to believe that Asia, emerging-market equities are in a secular bull market,” Garner wrote. Still, “we would not chase the market here over the summer months.”

The MSCI index climbed 1.1 percent as of 9:58 a.m. in New York. The 22-country benchmark surged 55 percent from February through May, a record three-month advance, on speculation earnings will rebound as the global recession eases. The rally stalled this month as valuations reached the most expensive level since December 2007.

‘Correction’

Garner’s previous forecast for the MSCI gauge was for a rally to 810 by the end of 2009. He reduced his recommended equity allocation to 54 percent of an emerging-market portfolio from 56 percent and advised investors to increase cash holdings to 5 percent from 3 percent.

Garner’s call for a “correction” in emerging-market stocks contrasts with a more bullish short-term outlook from Adrian Mowat, JPMorgan Chase & Co.’s Hong Kong-based chief Asian and emerging-market strategist.

Mowat wrote in a report dated yesterday that he sees “no obvious fundamental triggers for correction” and investors should take advantage of this month’s retreat in stocks to “position” for further gains through the end of the year.

“Potentially, we are in a powerful rally in emerging- market equities,” Mowat said.

Developing nations may grow their share of global gross domestic product to about 35 percent by next year from 20 percent a decade ago, Garner said. That will help boost emerging markets’ weightings in global stock indexes, he added.

“We anticipate that demographic trends and the adoption of the market economy in most EM countries will sustain the recent trend towards a more EM-centered global economy,” Garner wrote.

To contact the reporters on this story: Chen Shiyin in Singapore at schen37@bloomberg.net ; Michael Patterson in London at mpatterson10@bloomberg.net .

Bloomberg Japan Business Confidence Rebounds; Demand for Services Rises

June 22 (Bloomberg) -- Japanese manufacturers became less pessimistic this quarter and demand for services rose in April amid signs the country’s worst postwar recession is easing.

Sentiment was minus 13.2 points this quarter compared with minus 66 three months earlier, a joint survey by the Cabinet Office and Finance Ministry showed today. The tertiary index, a gauge of money spent on phone calls, power and transportation, climbed 2.2 percent from March, the Trade Ministry said.

The Nikkei 225 Stock Average has climbed 39 percent since dropping to a 26-year low on March 10, buoyed by speculation $2.2 trillion in stimulus spending by governments worldwide will rekindle overseas demand for Japanese products. Tax breaks and shopping incentives introduced by Prime Minister Taro Aso have helped lift consumer confidence to a 14-month high.

“There’s a recovery on the way for Japan,” said Jan Lambregts, head of Asian research at Rabobank International in Hong Kong. “There’s a lot of stimulus there and that will help, but not all of the growth is coming back.”

The yen traded at 96.12 per dollar as of 8:55 a.m. in Tokyo from 96.08 before the reports were published. A negative reading on business confidence means pessimists outnumber optimists.

Easing pessimism among Japan’s manufacturers has much to do with the outlook for China, where $586 billion in government spending on construction projects and consumer incentives is feeding demand for Japan’s heavy equipment, cars and materials. The World Bank last week raised its growth forecast for China to 7.2 percent from a March estimate of 6.5 percent.

Stimulus Fillip

Japanese companies are already benefiting. Nissan Motor Co.’s sales to China rose 37 percent in April from a year earlier. About two-thirds of the cars the company sells in China are eligible for a government subsidy that halves the sales tax on vehicles with smaller engines.

Japan’s own stimulus measures -- 25 trillion yen ($260 billion) pledged since October -- have started to take hold. Sales of electronics are by up 18 percent since the government last month introduced a program to encourage consumers to buy eco-friendly products, according to Tokyo-based researcher Gfk Marketing Service Japan Ltd.

Industrial production rose at the fastest pace in 56 years in April as companies replenished stockpiles they managed to run down during the worst of the export collapse. The rebound in output prompted the Bank of Japan and the government to raise their assessments of the economy in the past two months.

Smaller Economy

Still, two quarters of record contractions in gross domestic product have shrunk the economy down to its 2003 size. Exports and production have fallen by more than a third from last year’s levels.

That’s putting pressure on managers to cut jobs and forcing companies to slash investment, spending that would normally trickle down to the smaller business that make up 70 percent of the economy. A survey published this month by the Nikkei newspaper showed companies, saddled with equipment they no longer need, plan to cut capital spending by an unprecedented 15.9 percent this business year.

“Consumer spending will probably stay relatively solid in coming months, supported by stimulus measures,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. “But it’s highly likely to weaken as the wage and labor market deteriorate further.”

The unemployment rate rose to a five-year high of 5 percent in April and economists surveyed by Bloomberg expect it to climb to a record 5.8 percent next year. About two work seekers are competing for a single spot, the most severe job shortage on record.

Today’s business confidence report offers a hint of the results likely in the Bank of Japan’s Tankan survey due July 1. That report, the nation’s most closely watched gauge of corporate confidence, will show sentiment among large manufacturers improving from March’s record low, according to economists surveyed.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

Bloomberg Bumi Resources Seeks Approval on Asset Pledge: Week Ahead

June 22 (Bloomberg) -- PT Bumi Resources, Asia’s largest power-station coal exporter, will seek approval from shareholders to pledge assets to get loans.

Investors at the June 26 meeting will decide whether to use assets, including shares in units, inventory and escrow accounts, as collateral for “current or future” financing, the company said in a June 5 filing to the Indonesia Stock Exchange.

Bumi owns majority stakes in two coal miners, which account for about a quarter of the output of Indonesia, the world’s biggest exporter of thermal coal. The shareholder meeting was initially scheduled to take place in February.

Bumi in January announced three transactions valued at 6.12 trillion rupiah ($586 million). The company has said it would seek to renegotiate the price of one of the acquisitions after Indonesia’s market regulator said it was paying more than the
value of the company.

In the June 26 meeting, shareholders will also vote on the dividend distribution from 2008 earnings and changes in board of commissioners.


For Related News and Information:
Stories on Bumi Resources: BUMI IJ CN
Most-read Indonesian stories this week: MNI INDO 1W

[BRIGHT INFO] "Just a Note"

Good day to you.

The DJAI fell 0.19 %. But the S&P added 0.31 % and the Nasdaq rose 1.09 %. DJIA Loses 3 % for the week.

Major Southeast Asian stock markets rose on Friday as index heavyweights attracted bargain hunters, with Singapore ending a six-day fall and Thai stocks up after interest rate comments from the Bank of Thailand.

Markets in the region tracked improving sentiment elsewhere in Asia as U.S. factory and jobs data provided more evidence that the global economy was starting to recover from its deep recession.

Recent sell-offs in Southeast Asian stocks had led to cheaply valued shares but investors were still looking for fresh reasons to buy. A U.S. Federal Reserve policy meeting next week may provide such a trigger, with signals on the economy.

The Indonesian index JCI was up 2 % on Friday, ending a 6.8 % fall over the previous four days, pushed up by a 4 % surge in Astra International and a 7.5 % gain in top lender Bank Mandiri.

Crude oil for July delivery fell $1.82, or 2.6 percent, to $69.55 a barrel on Friday on speculation that supplies of the motor fuel will climb as refineries bolster output and imports gain. Coal on Newcastle Port tumbled 7.74% from last week to $70.81. Tin fell 0.8 % to $14,825 a ton, while nickel rose 1.3 % to $15,200 a ton. Malaysian palm oil futures ended softer on Friday for the third consecutive day, touching a new 10-week intraday low.

Nothing changes on our fundamental economic but we must watch political situation carefully. Rupiah movement was one of trigger on our market. After surged at 10600 on Friday Morning rupiah pull back and strengthen to 10300.

My Top Pick is still same, TLKM, ANTM, INCO, TINS, BUMI, BNBR, and DEWA. Start Looking for BBRI, UNTR and PGAS as government wants 90% dividend from net profit. Especially on TINS, I think TINS will be very attractive this week with around 6% dividend yield.

“Do we need to rest here? Do we need to pull back? Or can it continue? "


[Personal Opinion ]
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DISCLAIMER: This report is issued by [BRIGHT INFO]. Although the contents of this document may represent the opinion of [BRIGHT INFO]. We cannot guarantee its accuracy and completeness.