Jakarta sees heaviest foreign selling since MayIndonesia's stock market fell nearly 3 percent to a two-week low on Tuesday, retreating from a recent record high as higher-than-expected inflation for July raised fears of an interest rate rise, sparking profit-taking. Foreigners sold a net $66 million of stock, the heaviest selling since May 21.
The change in interest rate views prompted broad selling in big-caps and banks. Economists thought Bank Indonesia would keep its policy rate on hold at its meeting on Wednesday but would raise rates in the fourth quarter.
There was profit-taking as well. But since the economy is in good shape, we don't think there will be a drastic fall. Fundamentally, the stock market looks strong. But we will see profit-taking here and there.
Indonesia’s export growth undershot at 31.7% YoY in June (consensus 34.9%) while import growth overshot at 47.3% YoY in June (consensus 33%). Trade balance stood at US$0.6 bn in June against consensus US$1.8 bn. The ongoing strength of import relative to export growth is a further indicator of strong domestic relative to external demand.
I just worries that rupiahs will weakening in the coming month. The weaker than expected trade balance, higher than expected inflation all point to a softer IDR.
We must be carefully with interest rate sensitive stocks right now and sell on strength recommendation on this sector and switching to Telco, energy and commodity (hard and soft) with better outlook for global economic.
But for today I think jsx will trade at the narrow range 2950-3003 level. Soft technical rebound will trigger the market at the morning session support by big cap shares.
"Cash & Cash"
Bang Juntri
DISCLAIMER: This report is issued by Bang Juntri. Although the contents of this document may represent the personal opinion of Bang Juntri. We cannot guarantee its accuracy and completeness.
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