A Cup of Tea 20 May'10

It's beginning bear or it is an opportunity ... ?

European problem was getting worse. The real problem still unsolved. Some analyst still doubt about how the European member manage their budget deficit. Euro was still under pressure vs USD. European index was down more than 2% last night. Some economist had start thinking about double deep crisis if European member still not solid to solve this problem.

What about our market?

Yes, our economic strong enough. The Gov. could maintain inflation and our GDP still growth. Our "devisa" reserve is highest ever. The Gov. will maintain our IDR at 8500-9500 level. I think BI will keep the SBI at this level until 1H10. With this situation I believe that European problem just give minority impact on our economic.

Good news from president about our new Minister of Finance will support and reduce some negative impact from region for today. But this is still euphoria for a couple days. Trading buy and Sell on Strength for short term strategy.

Anyway, European problem still give negative impact to JSX. Our market will get PE adjusted from region. Now our market trade at 13.50x PE2010 and 11.34x PE2011 slightly higher than region (source said). I still put our target index at 3050 (12.45x PE2011) by year end.

Our market will open higher with new MOF issue and then will drop gradually. Financial sector will support the market but still caution on commodity related.

Technical

On technical wise support for jsx at 2650 level which is around 10.75x PE 2011, And I think at that level should be an investing grade.

Buy banking, consumer, property and base metal relation for medium term investment. Wait or Buy on Weakness for Automotive, coal and CPO related.

HAPPY HUNTING ...!!!


Bang Juntri
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