ASEAN KEY DESTINATIONS
Asean Stock Watch- July 4
Markets remain closed for the Fourth of July holiday.
Indonesia’s benchmark index closed at a record high on Friday, boosted by increased confidence in the local economy amid slowing inflation.
The Jakarta Composite Index rose 38.53 points, or 0.99 percent, to close at 3,927.10. It briefly touched 3,956.78 in the afternoon, approaching the 4,000 level, and finished the week up 2 percent.
Friday’s gains came shortly after the Central Statistics Agency (BPS) announced that inflation slowed to 5.54 percent in June from a year earlier, down from 5.98 percent in May.
“Slowing inflation adds more reason for the JCI to advance,” said Stefanus Susanto, an analyst with UOB Kay Hian Securities. Slowing inflation also eases pressure on Bank Indonesia to raise interest rates, he added.
More than 3.9 billion shares worth Rp 5.46 trillion ($638.8 million) changed hands, and gainers beat decliners 120 to 91. Foreign investors bought Rp 760 billion more in shares than they sold.
“With fundamental economic indicators such as a stable interest rate and economic growth, the JCI should have reached the 3,900s three months ago,” Stefanus said, adding that the index may hit 4,000 next week.
Analysts at several brokerage houses said they were bullish on Indonesia’s equity market, forecasting the JCI to reach 4,200 to 4,500 by the end of the year. The JCI has gained 6.05 percent so far this year.
Astra International, the nation’s largest auto manufacturer, gained 3.15 percent to close at a record Rp 66,550. Its affiliated parts distributor, Astra Otoparts, rose 12.31 percent to Rp 3,650.
Analysts said the inflation news saw investors seeking out bargains in the automotive and finance sectors.
Bank Rakyat Indonesia, the country’s biggest bank by revenue, rose 3.1 percent to a record Rp 6,700. Bank Central Asia, the largest by market value, gained 2 percent to Rp 7,800.
The rupiah strengthened 0.3 percent to trade at 8,543 to the US dollar at the close on Friday. It gained 0.6 percent for the week.
The FBM KLCI was up 5.70 points, or 0.36 percent at 1,588.64 in early trade on Monday, driven by gains in banking stocks.
Turnover was 168.11 million shares done valued at RM193.51 million. There were 246 gainers, 200 losers and 227 stocks unchanged.
HwangDBS Vickers Research said in a report issued today that Wall Street was upbeat last Friday with the key bellwethers increasing between 1.4 percent and 1.5 percent at the closing bell. “The unexpected pick-up in US manufacturing activity in June lifted investor sentiment ahead of the long holiday weekend. We expect the positive US equity market performance to boost trading performance in Asia today,” the research house said.
It added that the FBM KLCI could show an upward bias, climbing towards its immediate resistance target of 1,605 points. Stocks that could draw trading interest today include Wah Seong, after it announced that it won a US$45 million Australia Pacific liquefied natural gas pipeline coating contract and Tanjung Offshore, following its RM50mil long-term charter contract awards from three offshore service vessels from Petronas Carigali.
Meanwhile, regional peers were up in their early trade with Shanghai SE Composite having gained 1.15 percent to 2,791, Kopsi was up 0.98 percent to 2,146.49 and Singapore's STI increased 0.68 percent to 3,160.24.
The ringgit against the US dollar was quoted at 3.0020 against yesterday's close at 3.0088. Crude oil was up at US$95.09, from yesterday's close of US$94.94.
Upbeat sentiment from the previous week may spill over to this week’s trades, allowing Philippine share prices to post gains for the third consecutive week.
“We have broken the 4,300 consolidation level on Friday and it seems like the positive sentiment can still push us higher,” said Astro del Castillo, managing director at First Grade Holdings. “With the PSEi breaking out of a two-month old consolidation range and ending at a new eight-month high last Friday, we are expecting momentum to carry over to next week’s trades,” said AB Capital Securities Inc.
Week on week, the composite index rose 4.56 percent following positive global market sentiments on easing concerns about Greece’s debt problems, suggesting that the bulls are back in the game, analysts said.
“Technically, the market is turning positive despite numerous fundamental headwinds. We could see a bullish uptrend in the medium term after the breach of the 50-day exponential moving average line,” AB Capital said.
Key drivers for next week will mostly come from external sources, particularly the key European Central Bank meeting on interest rates and the latest US employment data.
“The latter will be key for the market as it will show if the global economy is indeed on the road to recovery,” said AB Capital.
Immediate resistance for the PSEi is its recent high of 4,413 while support is at 4,230.
Singapore shares opened higher on Monday, with the benchmark Straits Times Index at 3,151.87 in early trade, up 0.41 percent, or 12.86 points.
Around 63.9 million shares exchanged hands.
Thai composite stocks index opened on Monday at 1.070.71, up 29.23 points following Pheu Thai's landslide general election victory on Sunday.
Blue chip SET-50 was at 753.01, up 23.23 points.
Top five active stocks: BBL, SCB, KBANK, PTT, SC.
Thai Baht / USD opened Monday, up Baht 30.40/42, expected to appreciate in 30.35-45 range today.
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