Bank stocks have been the focus of buying this month as investors expect the robust macroeconomic environment to help banks stabilize their asset quality. Bank Rakyat Indonesia (BBRI) gained 34.7% this month, Bank Mandiri (BMRI) rose 28.7%, Bank Negara Indonesia (BBNI) increased 9.4%, and Bank Central Asia (BBCA) hiked 13%.

That said, year to date, most banking stocks fell. BBNI lost 19.4%, BBRI fell 6.9%, and BMRI declined 8.1%. BBCA becomes the second movers of market gain this year, behind pulp and paper producer Indah Kiat (INKP). BBCA gained 9% year to date, while INKP jumped 257.4%. Its sister firm Tjiwi Kimia (TKIM), paper producer, also surged 439.4%.

Positive financial results in the first half (H1) boosted the buying sentiment in banks this month. BBRI reported a 11% profit growth for said period, BBNI grew 16%, BMRI grew 28.7%, and BCA’s profit rose 11.4%.

Improve banking outlook, from positive to stable, released by Moody’s Investors Service last week supported banking stocks. The agency upgraded sovereign rating of nine banks including BBRI, BBNI, BBCA, not for BMRI. Other banks were upgraded are Bank Tabungan Negara (BBTN), Bank CIMB Niaga (BNGA), Pan Indonesia Bank (PNIN), Bank Danamon Indonesia (BDMN), and Bank Permata (BNLI).

Moody’s said strong economic growth will support the operating environment for banks over the next 12-18 months. In particular, macroeconomic policies will lead to real GDP growing 5.2% annually in 2018-19, after 5.1% expansion in 2017. And, loan growth will accelerate to 10%-12% annually during this outlook period from 8.2% in 2017.

COAL

Trading in coal stocks also a focus this month but they turned into a consolidation along with the correction in global coal prices by 7.58% this month, cutting year-to-date rise of 18.75%. On Friday last week, coal price increased 0.64% to US$106.70 per metric ton (mt). But Indonesia’s average reference price of coal in third quarter will likely be significantly higher than the second quarter. July and August reference price were US$104.36 and US$107.83 per ton respectively.

Among coal stocks, Bayan Energy (BYAN) and Bukit Asam (PTBA) are the best performers year to date, as BAYN gained 86.8% and PTBA surged 98.8%. This month, PTBA gained 9.2% while Indika Energy (INDY) and Bumi Resources (BUMI) fell 11.4% and 10.8% respectively.

Adaro Energy only rose 1.3% so far this year, but has fallen 25.4% from its peak in January 30. Earlier last week investors picked up ADRO on rumor Sandiaga Uno would be the running mate for Prabowo Subianto as vice president candidate of 2019 presidential election. Investors then sold again ADRO on Thursday and Friday last week, selling on news, following the real nomination of Sandiaga.

It is interesting to look the development of public perception on Prabowo-Sandiaga pair, also the chance to win the election next year. Sandiaga’s Saratoga gained 2.16% on Friday last week. ADRO is the first coal producer that utilizing biodiesel 20 for its mining vehicles (dumptruck) as urged by government since last June. This is good for efficiency in operating cost.

Coal miner Indo Tambangraya Megah (ITMG) declined 1.16% on Friday, but has gained 34% year to date. The Company allocates US$30 million for acquiring one coal mining concession in Central Kalimantan, from PT Nusa Perdana Resources (NPR). Said mining area has coal reserves of 77.4 million tons with 5,500 calorie (Kcal) per kilogram.

OTHERS

Investors are concerned with the reverse stock split initiated by property developer Bakriland Development (ELTY) as this would lose investors. A forum of investors has urged stock exchange management to reject ELTY’s proposed reverse stock split as said action is not inline with the Company’s fundamental profile. Geo Link, a creditor of ELTY, is assumed to have prompted ELTY to launch the reverse stock split.

Shareholders of telco tower operator Sarana Menara Nusantara (TOWR) have approved the Company’s plan to launch the shares buy back for 2.55 billion units, representing 5% of its enlarged capital. TOWR’s price is stagnant while its earning performance have improved in past three years with 30% growth.

DISCLAIMER: AUTHOR HAS NO POSITION IN STOCKS MENTIONED

By Yohannes Obor

Copying, redistributing, and retransmitting this article is a violation of copyrights.