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Indosurya Weekly Report
Second Week, July 2010
Your Investment Partner
Economy Indicator
The Stress Test process may not have been strict enough
European regulators found that 7 banks need to raise a combined €3,5 billion ($4.5 billion) of
capital, underwhelming analysts who said the stress tests may not have been strict enough.
The amount of capital needed is much lower than the market expected which oversees $33
billion. It seems quite trivial considering the concerns about losses from the sovereign crisis.
Germany’s Hypo Real Estate Holding AG, Agricultural Bank of Greece SA and five Spanish
savings banks didn’t have adequate reserves to maintain a Tier 1 capital ratio of at least 6%
in the event of a recession and sovereign-debt crisis. The banks that failed the stress tests
are in “close contact” with national authorities over how they will raise capital. The right
explanation here is that the testing was not very rigorous. The European tests may not have
been strict enough because they ignored the majority of banks’ holdings of sovereign debt.
The evaluations took into account potential losses only on Government bonds the banks
trade, rather than those they are holding until maturity.
The positive influence, stronger lifted JCI
Throughout last week, JCI moving very volatile due to the tug of positive and negative
sentiment from within and abroad where rose 1,66% compared to the previous week.
However, the strength of the positive sentiment was finally able to lift up the JCI to top-level of
3.000 which was a new record achievements. As we’ve predicted previously, where at last
week, JCI trying to achieve and even exceed level 3.000, reached in mid of last week.
Powerful factors that encourage JCI is the positive expectations of investors' economic
condit