The JCI July 24, 2020
Jᴜʟʏ 24, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 5,085ᴘᴛ – 5,175ᴘʏ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 5,145ᴘᴛ)
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴄʟᴏsᴇᴅ ʟᴏᴡᴇʀ ʙʏ sᴏᴍᴇ 2% ᴍᴏsᴛʟʏ ʙʏ ᴘʀᴏꜰɪᴛ-ᴛᴀᴋɪɴɢs ᴏɴ ᴛᴇᴄʜɴᴏʟᴏɢɪᴄᴀʟ sʜᴀʀᴇs
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ꜰʟᴜᴄᴛᴜᴀᴛᴇ ᴀɴᴅ ᴄᴏɴsᴏʟɪᴅᴀᴛᴇ ʙᴜᴛ sᴜᴘᴘᴏʀᴛᴇᴅ ʙʏ sᴛᴀʙʟᴇ USDIDR ᴀɴᴅ ʟɪǫᴜɪᴅɪᴛʏ
Morning,
The Jakarta Composite Index (JCI) today (24/7) is expected to be in the range of 5,085pt – 5,175pt in a consolidation phase but stable USDIDR and liquidity support. Meanwhile, yesterday (23/7) in Wall Street the DJIA ended lower by 353 points or 0.6% at 26,652pt, while the S&P500 and the Nasdaq both closed lower by 1.2% and 2.3%, respectively, mainly due to the United States (US) weekly initial jobless claims data that showed total of 1.4mn cases vs. 1.3mn widely-expected, and that marked the 18th straight weeks of above- 1mn jobless claims.
𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐒𝐞𝐜𝐭𝐨𝐫
𝐇𝐢𝐠𝐡𝐞𝐫 𝐰𝐨𝐫𝐥𝐝 𝐭𝐡𝐞𝐫𝐦𝐚𝐥 𝐜𝐨𝐚𝐥 𝐩𝐫𝐢𝐜𝐞 𝐟𝐢𝐧𝐝𝐬 𝐢𝐭𝐬 𝐰𝐚𝐲 𝐭𝐨 𝐞𝐥𝐞𝐯𝐚𝐭𝐞 𝐝𝐨𝐦𝐞𝐬𝐭𝐢𝐜 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐢𝐧𝐠 𝐩𝐨𝐰𝐞𝐫
Indonesia coal – mining counters is a must have in the list of investors’ selection with portion being adjusted to suit each’s risk-preference, in our view, despite its relatively higher volatility as compared to the other more resilient ones for the following reasons.
1) Coal use as the major fuels for electricity is expected to continue, and especially so during the current pandemic climate, despite the environmentalists’ dislike. To replace the low-cost energy based on coal seems unviable at present for to find better alternative fuels, huge funds is necessary to finance further researches, not to mention tax revenues and employment that are forgone. Indeed, during the climate talk in 2019 that took place inGermany, 20 (twenty) countries agreed to phase-out coal by 2030, BUT this group did not include any of the world’s biggest coal producers: China, India, the United States, Australia, Indonesia, Russia, South Africa and Germany.
2) Indonesia listed coal mining producers are global players in terms of production rates that produce mostly thermal coal of calorific value in the range of 5,100kkal – 6,100kkal or ones that is most suitable to produce electricity.
3) Indonesia exported 375mn tonne of coal last year (2018: 343mn) worth of USD20bn (2018:20.6bn), made-up of 13% of total non-oil and gas export values, and made-up 80% of foreign exchange from mining exports. Inherent with this contribution, the country earns duties, income tax, value added-tax , on top of direct financial benefit to coal – explorers and their labors. Therefore, positive trend of coal price create multiplier effects in domestic economy , through private consumptions.
𝐋𝐚𝐭𝐞𝐬𝐭 𝐭𝐡𝐞𝐫𝐦𝐚𝐥-𝐜𝐨𝐚𝐥 𝐩𝐫𝐢𝐜𝐞 𝐭𝐫𝐞𝐧𝐝
Last close was at USD55.4/tonne yesterday which was off its year-low of USD52/tonne in late April, the price started reversing since early May. Current price is at 30% lower as compared to the same spot last year. Analysts cited that coal price is set to recover given the tightening of oversupply as well as demand recovery which we somehow agree. New investments on coal exploration and productions, as in any other commodities, face challenging current situation, in our view.
At the other end, yesterday the WTI price closed lower by 2 % to USD41.1/barrel for fear on heightened Coronavirus cases. Meanwhile the USDIDR closed at IDR14.669 vs. IDR14.655 the previous one.
We advise the following recommendation , for both trading and longer-time investment purpose. 𝐀𝐀𝐋𝐈, 𝐋𝐒𝐈𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘈𝘨𝘳𝘪, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘜𝘯𝘥𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐔𝐍𝐓𝐑, 𝐈𝐓𝐌𝐆, 𝐀𝐃𝐑𝐎, 𝐏𝐓𝐁𝐀 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘢𝘭 𝘔𝘪𝘯𝘪𝘯𝘨, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵), 𝐆𝐆𝐑𝐌, 𝐔𝐍𝐕𝐑, 𝐈𝐂𝐁𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘯𝘴𝘶𝘮𝘦𝘳, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐀𝐒𝐈𝐈 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘈𝘶𝘵𝘰𝘮𝘢𝘵𝘪𝘷𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵), 𝐚𝐧𝐝 𝐀𝐂𝐄𝐒, 𝐒𝐂𝐌𝐀, 𝐌𝐀𝐏𝐈 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘛𝘳𝘢𝘥𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵),𝐚𝐧𝐝 𝐓𝐊𝐈𝐌 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘉𝘢𝘴𝘪𝘤 𝘐𝘯𝘥𝘶𝘴𝘵𝘳𝘺, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵).
Cheers,