The outlook on Indonesia’s stock market remains positive at JP Morgan Equity Research, which raised its recommendation on the market, even as the benchmark stock index slipped from a record high. The securities firm upgraded Indonesia’s market rating to overweight, citing improved thermal coal and palm oil prices, stable economic momentum and attractive fundamentals. The overweight rating suggests that investors hold more shares in Indonesia in their model portfolio. “Our commodity team forecasts stabilization in coal and palm oil prices. J.P. Morgan’s economics team forecasts a current account surplus in 2013.
The key assumptions are lower refined petroleum product imports and higher gas exports,” the research house said on Friday. “The consensus is more optimistic.” With this upgrade, Indonesia joins India, Thailand and the Philippines as countries that have an overweight rating from JP Morgan. South Korea, Taiwan, Singapore and Australia are rated underweight. “As is the situation in our other EM overweights [India, Mexico, Thailand and the Philippines] ex Turkey, we think Indonesia is a fairly-priced growth market.
Key sectors in Indonesia trade on par or at a slight discount to Asean.” JP Morgan also remained bullish on financials and industrials sectors, but was cautious on technology hardware and energy companies. Aditya Srinath, equity research with JP Morgan in Jakarta, said in December that he expected economic growth in the country to translate into good corporate performance, with earnings growth pegged at 15 percent this year. The benchmark Jakarta Composite Index lost 11.88 points, or 0.3 percent, to 4,491.27 on Friday, after closing on Thursday above the 4,500 mark for the first time.
For the week, the index gained 0.2 percent. The consumer sector led declines, with a 0.9 percent loss, paring a three-day, 1.7 percent gain. Unilever Indonesia, the nation’s largest seller of shampoos and soap bars, lost 1.4 percent to Rp 22,000. Kalbe Farma, one of the biggest makers of health-care products, dropped 2.7 percent to Rp 1,090. The mining sector fell 0.8 percent, led by Vale Indonesia, the largest nickel miner. Vale lost 1.7 percent to Rp 2,875 after the price of nickel on the London Metal exchange dropped 3 percent in the three days to Thursday.
Agricultural stocks as a group lost 0.4 percent on concern that India’s economy will slow. India is one of the biggest buyers of Indonesian crude palm oil. “This slowdown threatens Indonesia’s CPO export since India is Indonesia’s main export destination after European Union,” Samuel Sekuritas said in a note to clients. London Sumatra Indonesia, one of the largest palm plantation companies, lost 1.1 percent to Rp 2,200. Meanwhile, Astra International, the largest automotive distributor, gained 1.3 percent to Rp 7,750, cushioning some of the index’s decline.
Kim Eng Securities, in its note to clients on Friday, said that preliminary figures from the Association of Indonesian Automotive Manufacturers (Gaikindo) suggested that car sales in January rose 27 percent from the same month last year. The rupiah strengthened to 9,685 to the dollar from 9,725 the day before. It gained 0.2 percent for the week.
Additional reporting from Reuters
source : the jakarta globe
Additional reporting from Reuters
source : the jakarta globe
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