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Introduction


One of Indonesian stock market indexes, LQ-45 index consists of 45 companies of which their inclusions are evaluated twice each year by the Indonesian bourse operator.
Currently, the companies included in the index are (based on the sector):



Thus, the majority of the components fall in the mining sector. After 31.1% exposure to the mining sector, the next influential sector is finance with a share of 15.6%. Infrastructure, utilities and transportation has the third biggest share of 13.3%, followed by consumer goods industry which holds 11.1% (see the chart below).

2011 Performance

The index ended August at 676.255, giving it the following statistics:

- Year-on-Year (August 2010 to August 2011) : +16.33%
- Year-to-date (Since start of 2011) : +2.25%
- First quarter 2011 : -0.35%
- Second quarter 2011 : +4.79%
- First half 2011: +4.43%
- August 2011 : -7.34%

August’s steep losses had knocked the index back off its recent all-time peak at 743.33 and eroded its YTD gains to just 2.25%.

Here’s the weekly chart of LQ-45 index:


And here’s the monthly chart of the index:


This one is the daily chart of the index:


The Constituents’ Performances So Far

This year, since the beginning of January the top 10 performing stocks are:


While during the last two quarters the list is as follows:


For the first half this year, here are the top 10 performers:



But for the month of August, there were only five gainers, and four losers. A stock turned out unchanged for the month:


The Favorites

Clearly 5 stocks are already favorites: UNVR, GGRM, LSIP, CPIN, and JSMR. During the horrid month of August, these five not only managed to outperform the LQ-45 index, but they have also scored gains while most other LQ-45 constituents were tumbling.

In addition, combining the 5 top 10 tables mentioned earlier, we can also add BBCA and BBRI. Meanwhile, ASII, ENRG, GJTL, ICBP, and INDF are also worth considering.

Hence, for the month of September, these 12 stocks could be included in the portfolio: ASII, BBCA, BBRI, CPIN, ENRG, GJTL, GGRM, ICBP, INDF, JSMR, LSIP and UNVR.

As a reminder, the basis for these stock picks is simply on each stock’s performance throughout the observed periods. No fundamental reasons whatsoever are used in the method, so it would disregard any conflicting fundamental reasons present at the moment.


While one may find 12 stocks to invest as too much to handle, these can be squeezed further by looking at the table above. GGRM is the most favorite as it posted a ‘clean sheet’ so far. The next best thing would be JSMR, with one ‘small red’. CPIN is also a favorite with one ‘small red’. After that, BBCA’s August losses may be tolerated, considering its solid performances throughout other periods of observations. INDF is a defensive stock which worth consideration. BBRI also got the same great performance along with ASII. The performance of these seven stocks will be monitored on a day-to-day basis, starting from the beginning of September.


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