Sakari

Indonesia Coal / Sakari: Indonesia’s Head of Fiscal Policy Office (BKF) says export tax difficult to implement; also that domestic supply security is already being addressed by the Domestic Market Obligation (DMO). He cited that the difficulty is due to a) different royalty rates between different concession regimes, and b) lack of viable upgrading technology (Bisnis). Deutsche notes the BKF is typically the main coordinator on policies regarding export tax. Reading between the lines, the house believes the govt appears to be backtracking on the idea of a coal export tax. This coincides with comments last wk by the Energy and Minerals minister Jero Wacik, who said “I have to confirm to all coal companies that there is no plan to impose export duties.” The coal sector stocks have underperformed the market in recent wks, frustrated over confused policy message, not least after officials from the Energy and Minerals ministry said they were looking to impose controls on the industry to safeguard domestic supplies. Technically, Sakari is looking to be a possible rebound play, after rising from the multi-year low of $1.16 (now a key support level). Further evidence of a positive reversal can be seen from RSI and Stochastics emerging from oversold territory, while MACD has just initiated a positive crossover, accompanied by meaningful volume. If the rebound picks up momentum, expect a break of the 20day MA ($1.33) followed by a closing of the recent gap (at $1.365). This would then likely to confirm that Sakari is indeed back on a positive long term trend. In this case, a medium upside target would be next key resistance at $1.80.