Index Takes Another Plunge

TEMPO.CO, Jakarta - Poor domestic economic data amid the lack of positive regional sentiments has cause the index to take another plunge. "The increased inflation and the unexpected widening trade deficit will affect investors' selling activity," said Helen Vincentia, an analyst from Mega Capital Indonesia.

Beyond expectation, trade deficit in September reached US$660 million. It was caused by the export in September which reached US$14.81 billion and import US$15.47 billion, while the inflation in October is 0.09 percent. The calendar year-to-date inflation rate is 7.85 percent. At the end of the year, inflation rate estimated to be safe under nine percent.

The strengthening of trade deficit hinders the rupiah exchange rate which can potentially spark a selloff on shares with high dollar exposure, such as manufacturing and mining industries.

After moving sideways in the last two weeks, Jakarta Composite Index (JCI) returns to short-term weakening trend with support target at level 4,360. If this target is penetrated, there is a possibility that index will further decrease to level 4,190. Index potential strengthening will open if it is successfully closed above 4,650.

This week, index is predicted to move around 4,360 to 4,550 with tendency to continue correction. However, the improving China’s manufacturing data is expected to trigger a rebound. "Consider the trading position on shares such as Bank Mandiri, Bank BNI, London Sumatera Plantation, Jasa Marga, Perusahaan Gas Negara, dan Ace Hardware," Helen said.

PDAT | M. AZHAR