Foreign factors that contributed positively to the movement of the IHSG were good economic data from China and Japan. The latter recorded better than expected economic growth, while the former showed increased industrial activity in August. Moreover, the United States may not continue with its plan for a military action in Syria. This was also able to calm down global stock markets. Lastly, markets are speculating that the Fed's monthly USD $85 billion bond-buying program will be cut by USD $10 to $15 billion only, instead of previous expectations of USD $30 billion.

At the end of last week, Indonesia's president Susilo Bambang Yudhoyono appointed Mahendra Siregar as head of the Indonesia Investment Coordinating Board (BKPM). This position had been vacant since former BKPM chief Chatib Basri became Indonesia's Finance minister in May 2013. As the primary interface between business and government, the BKPM is mandated to boost domestic and foreign direct investment in the country through creating a conducive investment climate. Previously, Mahendra Siregar acted as deputy finance minister (2011-2013) and Deputy minister for Economic Affairs and International Economic Cooperation (2005-2009). Although the market expected Yudhoyono to appoint a director of one of Indonesia's state-owned companies to the post of BKPM chief, the market seems content with Siregar.

Foreign investors came back to Indonesia last week but it is too soon to tell whether the IDR 2 trillion (USD $175.4 million) of foreign funds that flowed to the Indonesia Stock Exchange (IDX) during the week is a real turning point.

Personally, I believe that last week's rising trend of the IHSG was not based on strong fundamentals. Indeed, slightly increased foreign exchange reserves and the Bilateral Swap Deals calmed down the market. However, if we take a look at the real market, various food product prices are still rising: the price of soybeans is still not under control. Remembering that food prices were a major contributor to August inflation, we should not be surprised if that situation continues into September. And although the higher benchmark interest rate of Bank Indonesia (7.25 percent) has a positive effect on the rupiah (which has been depreciating seriously this year), it also hurts the performance of Indonesia's listed companies because a large number of these companies borrow funds from banks.

| Source: Bank Indonesia

It remains unknown what the Federal Reserve will decide regarding its quantitative easing program and how the market will react on that decision. If the Fed decides to cut USD $10 billion only per month, I believe it will be positive for global stock markets as these markets have been prepared for a USD $15 billion cut. However, if the Fed decides to reduce its monthly bond-buying program by more than USD $15 billion, it will result in negative market sentiments.

This week, I expect the IHSG to be mixed. Towards the end of last week, the upward movement of the IHSG was limited as the resistance level at 4,450 came closer and closer. The stochastic indicates that the IHSG is overbought and may form a dead cross. The RSI has also been above the center line. The most important issue to watch this week is the result of the Fed meeting on 17-18 September. All market players are advised to follow the outcome carefully.

David Sutyanto is a research analyst at Jakarta-based First Asia Capital