Indonesia Daily Focus: Rate hike or No rate hike? - UOBKH

What to watch today: BI reference rate meeting @1200 (GMT+8)
Expect Bank Indonesia (BI) to maintain the benchmark rate at 6.75% on the back of lower-than expected inflation in Mar (headline: 6.65%, core: 4.45% YoY). Note that real interest rate is now positive (6.75% - 6.65% = 0.10%) and food px has started to ease. Hence, I see no reason for BI to hike rate today.

Pros: growth momentum is poised to continue.
Cons: credibility issue - does BI reactive instead of pro-active on inflation?
My take: I'm (cautiously) optimistic.

JCI (current: 3,745) is testing the 3,800 lvl again (see pic attached).
Why it should break >3,800 now? The stumbling block, i.e. inflation, that made JCI can't break 3,800 in the past (Dec 10 and Jan 11) is now no more.
Why it shouldn't break 3,800? RSI-wise, JCI is at the overbought level (71.25). Thus expect a ST breather before coming back up as upward momentum (MACD) is strong.
The X-factor: oil (WTI: US$108/bbl, Brent: US$123). Paper-traders are the one pushing oil px. No new negative news (other than another quake in Japan). Mkt already expected oil px would remain high (US$100-120) anyway. I'd stay put for now and would be more cautious when there's new newsflow.

Beneficiaries of no rate hike:
Auto sector: Astra Int'l (ASII IJ/HOLD/TP Rp64k), Gajah Tunggal (GJTL IJ/NR). For ASII, Toyota Japan expects to start p'ducing again next week at 50% capacity
Consumers: Indofood (INDF IJ/BUY/TP Rp6,550), Mitra Adiperkasa (MAPI IJ/BUY/TP Rp2,950), Japfa (JPFA IJ/BUY/TP Rp4,525)
Properties: Ciputra Dev (CTRA IJ/BUY/TP Rp490), Alam Sutera (ASRI IJ/BUY/TP Rp400)
Banks - more loan growth: Bank Mandiri (BMRI IJ/BUY/TP Rp8,400), Bank Danamon (BDMN IJ/BUY/TP Rp8,700), Bank Rakyat (BBRI IJ/BUY/TP Rp7,500).