Wednesday, July 9, 2008

We are on the cross roads....
Indonesia shares are likely to trade flat to slightly higher, helped by overnight gains on Wall Street due to a drop in oil prices. (This outlook has mentioned the bubbles of oil last week)
In the U.S., a plunge in oil prices Tuesday caused a spike in stocks, and sent investors stampeding out of second-quarter winners in the energy-and-commodities sector like Alcoa and into recent losers in the financial and healthcare sectors such as Fannie Mae and Merck & Co. Oil futures fell more than $5 to $136.04 a barrel after a nearly $4 drop on Monday's session, closing at its lowest level since June 26.
People may be rotating out the big momentum names as coal prices getting decimated while other commodity prices are seen following the trend of the oil. This outlook has gently reminded you all about the oil bubbles since last week... With recent movement in oil prices was 30% driven by speculation, I believe that we don't need Barrack Obama to win the presidency to see the oil fall to below $110 a barrel. Still, as no one would like to pose losses...there will be tough fighting in determining the oil prices in coming days...Let's enjoy the showdown... In Indonesia some smart and future-oriented funds have already gradually switched their investment in heavily robust mining stocks to financial-, manufacture-, and telecommunication-related stocks which in the short term period may return to become the main index defender, offsetting losses from selling in commodity-related stocks. The main index may go up and down by 16 and 49 points. Main index: 2252-2326.

TLKM: 7,300-7,700. Yesterday selling could show that some investors were confused what to do.... odidn'tnt know what to do... Telkom ADRs in NY rose 1.2% to $32.6, or equal with IDR7,500. I still go with buy at any level in these shares due to its business dominance and ahead of its plan to give IDR309 per share dividend (first stage) to shareholders registered as of July 11.

ISAT: 6,300-6,900. Confusing but may be looking attractive given new contenders besides Qatar telecom to buy Indosat shares from the market through a very RARE tender offer. This, however, should be considered that cellular services business is still crunchy...hehehe BUY on weakness or at any level

BMRI: 2,650-2,800. A new breath is refreshing... It is now trading at a pbv of 1.85 times, compared to the industrial average of 2.5 times. BUY at any level for mid term investment with IDR3,000 target may become a good level of profit taking.

BBRI: 5,200-5,600. It is still my top pick, but has to experience an investment surgery to take out short sell viruses. Net interest margin should remain the healthiest among banks. BUY on weakness or at any level

BBCA: 2,600-3,200. It is now trading at a PBV of 3.2 times, still below its historical level of 3.7 times. Sell on strength

BUMI: 7,000-7,800. It may be moving in a wider range and may lose its status as bellwether if it falls to below IDR6,600. It has selling average of coal at around $67 per barrel, far below current physical price of around $180 a ton in global market. Any SHARP fall in coal prices in the world markets WILL NOT affect BUMI's financial performance, but sentiment.

PTBA: 14,400-16,000. Some analyst may have to revise downward their targets of PTBA if oil prices continue to fall in coming sessions. It has the same story with BUMI and any drop in coal prices in the world market WILL NOT affect its financial statements.

INCO: 5,000-5,600. Most nickel companies like Inco and ANTAM have their selling average directly linked with global market prices which in the end would result in selling pressure in these two stocks. Opportunity remains, but good momentum must be maintained and left in check.

Take a good look at property and manufacture-related stocks. CTRA, WIKA, ADHI, TOTL are set to get a boost...

TBLA: 610-720 AALI: 24,300-26,900
LSIP: 8,800-10,200 KAEF: 147-180
UNSP: 1,430-1,900 BBNI: 1,190-1,320
PNBN: 750-1,020
MIRA: 680-930
INDF: 2,200-2,500