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Targeted Stock Amid Waiting for Emergency PPKM Extension

Jakarta, CNN Indonesia

Capital Market Observer Riska Afriani assesses the index stock will continue to strengthen in a limited way amid waiting for an extension decision Emergency PPKM. Last week, the JCI rose 0.54 percent, from 6,039 to 6,072 last week.

He projects that the JCI will advance in the range of 5,970-6,100 this week. The determining factor is how long the extension will be. If it is until the end of July which means that Emergency PPKM has lasted almost a month since last July 3, then market participants tend to respond positively.

The reason is that Emergency PPKM is seen as a reasonable policy in tackling positive cases of COVID-19 and the current high death rate. For information, the government recorded an increase of 44,721 positive cases and 1,093 deaths on Sunday (18/7).

Although the index has the potential to strengthen, but he said there are two possibilities that will happen. First, the tightening of mobility restrains the index rate, which could actually rise even higher if there was no explosion of positive cases followed by Emergency PPKM.

Second, market participants have anticipated the fall that occurred last year when the market panicked selling. Therefore, the market has adjusted expectations when tightening.

Toh, said Riska, this is not the first time that mobility has been tightened. In addition, both the government and businessmen already understand the steps that must be taken when there is an explosion of cases.

Riska is increasingly positive seeing the steady inflow of foreign capital flowing in. Last week, foreigners recorded purchases worth IDR 1.89 trillion.

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“I see the market has anticipated the fall or what happened last year, so that it doesn’t happen again this year. The index is able to be held because there is anticipation and market participants are not shocked like the beginning of the PSBB,” he explained to CNNIndonesia.com, Monday (19/7).

However, worries of course continue to lurk. On the one hand, investors will continue to take into account the impact of the extension of the Emergency PPKM on economic growth, which this year was revised lower than expected at the beginning of the year.

On the other hand, if the Emergency PPKM is extended beyond the end of July, Riska sees that there will be a different scenario, the market will respond negatively if the tightening lasts for more than a month.

Not only small entrepreneurs who scream because their income is disrupted, issuers will also be suffocated and have to start calculating the existing cash reserve pads.

Like an individual emergency fund that continues to be depleted without income coming in, the company’s cash will run out. If it’s like cash difficulties, then options that will burden the company’s finances such as debt will be a way out.

“Emergency PPKM extension, as long as it is not later than the end of July. If it is until August, the market response could be negative,” he explained.

This week, Riska said market participants could pay attention to the release of the benchmark interest rate of Bank Indonesia (BI), the release of data on claims for unemployment benefits which are released every Thursday local time, and data on US home sales (existing home sales).

For this week’s selected stocks, Riska projects that the market will be supported by variations in LQ45 stocks and second-tier stocks (second liner).

The recommendation is to buy LQ45 shares in installments that were previously released by the market, but are starting to show a reversal, such as BBRI, BBNI, BMRI, TLKM, ASII, and ICBP.

As for the second-tier shares, he recommended the shares of PT Allo Bank Indonesia Tbk (BBHI) and PT Bank Syariah Indonesia Tbk (BRIS).

In addition, amid rising commodity prices, such as CPO and coal, he assessed that the impact of the increase could be utilized by investors in the short term. The stocks of choice are PT Bukit Asam Tbk (PTBA), PT Adaro Energy Tbk (ADRO), PT PP London Sumatra Indonesia Tbk (LSIP), and PT Astra Agro Lestari Tbk (AALI).

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