JAKARTA. During trading on Friday (5/5), shares of issuers involved in the compact nickel industry moved in the negative territory. Even worse, several of them reached the Lower Auto Rejection (ARB) level.
Take a look at PT Trimegah Bangun Persada Tbk (NCKL) shares, which saw a 6.96% decline in value to Rp 1,270. Similar results were seen with PT Merdeka Copper Gold Tbk (MDKA), which saw a 6.96% drop in price to IDR 3,610 per share.
PT Harum Energy Tbk (HRUM) lost ground as well, falling 6.12% to IDR 1,380. Shares of PT Aneka Tambang Tbk (ANTM), the company that produces red plate nickel, compactly decreased 4.23% to Rp 2,040.
PT Merdeka Battery Materials Tbk (MBMA), a subsidiary of MDKA, also had a decline, falling 1.86% to Rp 790. PT Vale Indonesia Tbk (INCO), which also experienced a decline, had its share price fall by 0.36% to Rp 7,000.
The government’s proposed reduction in tax incentives is believed to have acted as a catalyst, driving down the share prices of nickel issuers. The tax incentive cut strategy aims to cut down on spending on cheap nickel items.
The government will keep concentrating on the industry of processing natural resources, but it wants to preserve nickel supplies, according to Reuters.
Indonesia wants to turn its nickel into higher value goods like the substance used in electric vehicle batteries because it has the greatest reserves in the world.
Since prohibiting the export of nickel ore in 2020, smelter investment in Indonesia has increased significantly. However, ferronickel or nickel pig iron (NPI), which is utilized in stainless steel, makes up the majority of the output. Only 30% to 40% of the time does it have nickel.
The government will no longer grant a tax vacation for investments in NPI, according to Minister of Investment Bahlil Lahadalia. According to Bahlil, downstream products in Indonesia must not only contain intermediate products but also at least 60% to 70% nickel.
Why do we grant a 10-year tax vacation when a BOP investment can achieve financial break-even in four to five years? That’s not right, Bahlil remarked, as cited by Reuters on Thursday, April 5.
According to Felix Darmawan, an equity research analyst at Panin Sekuritas, the government’s intentions and policies are now significant drivers for the movement of commodity stock prices.
Particularly in the case of nickel, whose share price recently has been influenced by the government’s commitment to the downstream sector by creating the electric vehicle (EV) ecosystem.
Simply put, exogenous variables associated with macroeconomic and global market dynamics predominated throughout this downturn.
“I notice that pricing for metal-based products are really low. According to Felix, Friday (5/5), “this is as a result of the rise in US interest rates in line with expectations of higher costs and weaker demand for steel and other nickel-derived products.”
Arjun Ajwani, a research analyst at Infovesta Kapital Advisori, stated that the drop in the price of nickel commodities globally was more pronounced as a negative mood. Additionally, the market is being overshadowed by unrest.
One of them resulted from First Republic Bank’s insolvency, which led to market panic selling that included commodity stocks. Additionally, since early 2023, the share prices of nickel issuers as a whole have been in a decline phase.
“Consequently, the drop in issuer stock prices coincides with this pattern. Additionally unpredictable and riskier than normal are commodities, said Arjun.
According to Arjun, nickel issuers often have strong fundamentals, promising business outlooks, and competitive valuations. Just that he advised waiting and watching initially for the time being.
It’s best to wait and find out. For instance, ANTM has broken through support. Therefore, it is best for investors to wait for a good entry price, according to Arjun.
Felix evaluated that this pullback can be a momentum to purchase on weakness in the meantime. We must continue to pay close attention to a number of unfavorable attitudes, including the evolution of the market’s prices on a worldwide scale and governmental regulations in this area.
Felix maintained his advice to purchase MDKA shares at a target price of IDR 5,500, INCO shares at a target price of IDR 7,700, and ANTM shares at a target price of IDR 2,800.
