Indonesia, Indonesia....

Indonesia has been in the news a lot lately. First, a few on Indonesia's mistake on economic policies against China backfiring on them. It followed by various unrests within the country. Lately, its burning of the jungle causing haze situation all over Southeast Asia while their ministers demanded their neighbours to thank them for supplying oxygen when there was no haze.

Then news on MSCI downgrading their index to "stand alone" status, effectively expelling it from global arena. This caused IDX to plunge to a low of 5,185, a drop of about 1,000 points from last week.

Thinking back, it made me wonder what exactly Indonesia's economy is strong in?

As far as I am concerned, Indonesia is a country with third largest population in the world. Its major exports include solid fuel (such as coal), minerals with palm oil third on the list.

However, majority of its population has remained in poverty with most of its wealth remained in the pocket of very few. While it produces fossil fuel and rice, it was not even sufficient for internal consumption.

Why a country so rich in resources with such high level of poverty? Answer is corruption, leading to incompetency.

Imagine the minister who demand Malaysia and Singapore to be grateful to Indonesia for the oxygen instead of complaining on the haze. He has ignored the fact that the greatest victim of the haze are the people of Indonesia, those affected in Sumatra and Kalimantan, where pollution level is above 1,200 on IPSU index, 4 times the hazardous level of 300.

What about that governor of East Kalimantan found doing his medical check-up in Singapore over his lung issue while the people of his state heavily immersed in the toxicity the haze?

The fires were started by companies assigned to the land. Yet, inaction of the government on these companies while the people suffer, claiming it is natural disaster caused by small farms clearing their land.

So how is the Indonesia's market doing?

Fig 1. IDX (JKSE) weekly chart

IDX has actually come all the way down from 9,174 to a low of 5,317 before correcting to its 21-week moving average of 6,551. 

It has since continued on its journey downward, breaking its lower Bollinger envelop. The penetration was very strong, I believe there is a retracement upward in the coming week. 

At the same time, MACD is already in the negative side and reversing downward. I think IDX will at least fall to 4,309 before the possibility of any reversal. Should this level not able to hold, its next level of support will be at 2,858.

If however, it manage to pull itself back up, the earliest sign of resistance will be at its 55-week moving average of 6,836. I believe it will be an uphill task from then on.