The JCI July 3, 2020

Jᴜʟʏ 3, 2020

* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 4,925ᴘᴛ – 5,100ᴘᴛ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 4,967ᴘᴛ)

* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴇɴᴅᴇᴅ ʜɪɢʜᴇʀ ʙʏ sᴏᴍᴇ 5% ᴏɴ ʙᴇᴛᴛᴇʀ-ᴛʜᴀɴ-ᴇxᴘᴇᴄᴛᴇᴅ ᴊᴏʙ ᴀᴅᴅɪᴛɪᴏɴ ɪɴ Jᴜɴᴇ

* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ sʟɪɢʜᴛʟʏ ᴇxᴛᴇɴᴅ ɢᴀɪɴs ʙʏ sᴜᴘᴘᴏʀᴛ ᴏꜰ sᴛᴀʙʟᴇ USDIDR ᴀɴᴅ ᴏɪʟ ᴄʟᴏsᴇs

Morning,

The Jakarta Composite Index (JCI) today (3/7) is expected to be in the range of 4,925pt – 5,100pt mainly supported by stable close of USDIDR and oil price  Meanwhile in Wall Street yesterday (3/7)  the  DJIA  ended higher by 92 points or 0.4%  at 25,827pt,  while the S&P500 and the Nasdaq both ended higher by  0.5%. The United States (US) government released June employment data that came with 4.9mn jobs creation as opposed to the 2.9mn jobs by economists’  estimates.

Bᴀɴᴋ Bᴜᴋᴏᴘɪɴ (BBKP) ᴏꜰꜰ ɪᴛs ʏᴇᴀʀ-ʟᴏᴡ ᴏꜰ IDR88/sʜᴀʀᴇ ʏᴇsᴛᴇʀᴅᴀʏ

In a separate note, Kookmin Bank (KB) , a subsidiary of South Korea KB Financial Group Inc., has smoothen its way to increase its stake in BBKP from currently 21.99% to a minimum of 51%.  According the OJK, KB has paid in an amount of USD200mn into the escrow account in the mid June to confirm its re-purchase plan that started in 2018. At present, other shareholders of BBKP include to Public as the majority of some 40%, local private company Bosowa Corporation of some 20%, and Indonesia government including Koperasi at some 15%.

The news is both positive and negative, in our view. Another acquisition by Korea’s KB implies that Indonesia is a promising source of growth.  In another side, a slightly unfortunate situation whereby domestic ownership that can not be maintained at the present time, while OJK mandatory  tender offer requirement for controlling-shareholders has been removed.

The confirmation came in after the peak of rush to the bank’s outlet, triggered by news circulating in the social media that BBKP could not fulfill customers’ need of cash withdrawal.  Our checking on BBKP latest financial statements revealed that the bank’s liquidity and solvency indicators, while declining, is very much within safe benchmark of the OJK.  Indeed,  that the bank decided to limit cash withdrawal, a wise step, in our view, to prevent further wild and groundless massive rush.

We expect with KB as controlling shareholders , BBKP can continue its transformation into the bank the most suitable to fit the current customers’ base. With this expectation, the share price closed at IDR184 yesterday, off its year-low of IDR80.

At the other end, yesterday  the WTI price increased by 2.1% to  close higher at USD40.7/barrel, mainly on the US’s better-than-estimated job data crude inventories declining data the previous day.  Meanwhile the  USDIDR  closed  at IDR14.516  vs. IDR14.341 the previous one.

We advise the following recommendation as for now, 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,