Jakarta, CNBC Indonesia – Fairly good achievements were recorded by the Composite Stock Price Index (CSPI) in the second quarter of 2020. In this quarterly period, the CSPI successfully appreciated by 8.07% until the trading session I on Thursday (2/7), even though the current year or year to date (ytd) JCI was still corrected 21.45%.
However, the rise in the JCI in the second quarter was not accompanied by an improvement in the condition of the Indonesian economy, even the release of data on the condition of the Indonesian economy in the second quarter was worse than in the first quarter.
The newest IHS Markit announced the Indonesian Manufacturing Purchasing Managers’ Index (PMI) for the June 2020 period number 39.1. Up compared to the month May amounted to 28.6. In the first quarter alone, the average PMI was in the range of 48.7.
PMI uses the number 50 as a starting point. If it’s below 50, it means the business world has not expanded. Still contraction.
Although improving, Indonesia’s manufacturing PMI is still be the worst when compared with countries of Other Asia. This is proof that the pace of recovery of the manufacturing industry in the country turned out to be slow.
This data is bad enough Indonesia’s Gross Domestic Product (GDP) is supported by the manufacturing industry alias. In the first quarter of 2020, this sector contributed nearly 20% of the national economy cake.
Furthermore, Indonesia’s annual inflation rate fell to 1.96% in June 2020, and is the lowest since May 2000.
This happens because people’s purchasing power has not recovered since the Corona pandemic was attacked last March. In addition, people are also reluctant to leave the house for fear of contracting the nCov-19 virus, which of course continues to encourage low inflation.
While from the source of the problem of the plummet of the global economy, it was recorded after first arriving uninvited in March, Corona had infected 57,770 people in Indonesia as of July 1. Even since 2 weeks ago the virus that loved this crowd has consistently infected more than 1,000 people per day, and it seems like this number will continue to rise.
These statistics certainly make foreign investors afraid, because the Indonesian government seems to have not been successful in tackling the nCov-19 virus. It was noted in the first semester that foreign investors had fled Rp 32.82 trillion from the local stock exchange.
This anomaly caused many analysts to consider the stock price rally in the second quarter to be just dead cat bounce or bear market rally only.
This is a phenomenon where the price increase that only occurs temporarily before further falling back deeper. This increase occurred because previously the stock price fell too much in too fast a time.
This was also agreed by the IMF dhis latest study is titled Global Financial Stability Report. The IMF warns that there is a disconnect between financial markets and the real economy.
“The disconnection between the market and the real economy increases the risk of financial asset price corrections when investors’ appetite for risk fades, this will pose a threat to recovery,” the IMF said in the Global Financial Stability Report.
“Referring to the modeling made by IMF staff, the difference between market prices and fundamental valuations is at the highest level in history in almost all developed countries for the stock market and debt securities, even though the opposite is true for stocks in some developing countries,” the report said. .
Moreover, ahead of the release of the company’s second quarter financial statements, the results are likely to be worse than the first quarter, the possibility of the CSPI to go back down in the third quarter is still wide open, especially if foreigners continue their net selling action on the local stock exchange.
Technical Analysis
Technically, JCI movement by using periods monthly (monthly) from the Boillinger Band (BB) indicator via the upper bound area method (resistance) and the lower limit (support). Currently, the JCI is approaching the lower boundary area BB and try to test the level the support.
To continue the increase from the previous period, JCI needs to pass the level resistance next, which is in the area of 5.157. While to change can be bearish need to pass the level support located in area 4.713.
Meanwhile, the Moving Average Convergent Divergent (MACD) indicator uses the average movement to determine momentum, with the MA line still playing in negative territory which is -299,910, then the tendency of JCI movement is still weakening.
The short-term Moving Average (MA) indicator has intersected down with its long-term MA so a pattern appears death cross which indicates a correction.
Indikator Relative Strength Index (RSI) is still in number 37, this number does not yet show overbought (overbought) or saturated (oversold).
RSI is a momentum indicator comparing the magnitude of the increase versus the current price decline over a period of time. Above the 70-80 level indicates oversold conditions, while below the 30-20 level indicates oversold.
Overall, through the technical approach with indMACD ikator and with the advent death cross, then movement IHSG henceforth is estimated to be happen correction.
Index needs to pass (break) one level resistance or support, to see the direction of the next movement.
RESEARCH TEAM CNBC INDONESIA
