Weekly Outlook 19 Nov 2007

19 11 2007

The market may again struggle for direction this week. Concerns that high oil prices will hit corporate profitability will likely limit upside potential. Yet at the same time, shares in companies which are not so exposed to rising energy prices may remain attractive given that the economy is continuing to grow at a faster pace. As such, stocks may consolidate this week with the JCI remaining in the range 2,650-2,700.

Another choppy week for Indonesian stocks as heightened concerns over the threat of inflationary pressures and a possible sharp downturn in the US economy were set against new economic data that shows that the Indonesian economy is picking up its growth pace on the back of low domestic interest rates and buoyant commodity prices. Indeed, according to the data released by the central bureau of statistics last week, the Indonesian economy grew at its fastest pace in the last 10 years, clocking up growth of 6.5 percent in 3Q07, or slightly higher than the 6.3 percent growth rate seen in the second quarter of the year.

Sentiment in the market was also buoyed by the successful IPO of state toll road developer Jasa Marga which stands to benefit if the government can finally get its muchheralded infrastructure initiative off the ground. So far, however, the results have not been good – although, going forward, a more concerted effort by the government to get things right in 2008 is expected.
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