Indonesia was the worst performing market in Asia for the second straight day last Friday after losing 29.4 points or -1.3%. The correction was most seen in plantation, mining and energy sectors which were predominantly the index's drivers. Market transaction value jumped 73.1% to Rp7.6trillion, boosted by a cross transaction of Rp4.1trillion in EXCL shares by foreign investors. Without these trades, market transaction value was actually down by 19.1% to Rp3.6trillion, with foreign net buy at a mere Rp14.8b. Foreign contribution to total market transaction jumped to 63.6% from only 24.7% in Thursday. Again, this was due to the cross transactions, without which, the total contribution would only be 22.2%, or less than the average of 28%. Our observation suggests that local investors are realising some of their gains, and taking a cautious stance while awaiting the crucial inflation data late this week.

Today, we predict the Indonesia Composite Index will trade flat to higher as investors prepare for several positive news which will be released this week such as 1Q08 corporate results due by 30 April and FOMC rate decision also on 30 April. A damaging factor however may arise from April's inflation number due on 1 May, especially if it breaches the 8.5% yoy mark (March: 8.17%) which will prompt Bank Indonesia to adjust interest rate by 25bp in their next meeting on 8 May. Support and resistance levels for the ICI are at 2,160 and 2,350 respectively.