Thursday, August 11, 2011

A Good Time to Buy Indonesian Stock

The index at the Jakarta Stock Exchange, the best performing equity market in South East Asia, has been dropping since last week and on Tuesday it fell more than 6 percent.

But it seems that the situation has improved that The Economic Times reported (below) that now is the good time to buy Indonesian stocks.

I hope that this prediction is not just for a short time.

 
Good time now to buy Indonesian stocks: Schroders

JAKARTA: An increasingly uncertain economic outlook in the United States and Europe will have relatively little effect on Indonesia's robust fundamentals, instead offering investors a good opportunity to buy equities in Southeast Asia's largest economy, a Schroders fund manager said. 

Indonesia's main stock market index, Southeast Asia's best performing equity market, has gained around 4 percent this year.

In line with other volatile equity markets, however, Jakarta stocks fell more than 6 percent on Tuesday, as investors worried about the debt crises in the United States and Europe.

"The Indonesian economy should be relatively less impacted but the stock market should be very much correlated with the volatility of the global stock markets," Kiekie Boenawan, head of investment at Schroder Investment Management Indonesia (SIMI), said in an email late on Tuesday.

"It should present a good opportunity to accumulate Indonesian equities as fundamentals are not impacted as much -- relative to other developed economies."
Asian stocks clawed back some lost ground on Wednesday, following a rebound in U.S. shares, after the Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being.

But economic growth in the archipelago of 17,000 islands is expected to be 6.6 percent this year, and growing slightly higher in 2012.

"The impact on the Indonesian economy will be relatively less due to Indonesia's low exposure to exports and also due to the low leverage of the economy," added Boenawan. "Most companies are experiencing net cash or very little debt.

"Assuming a 6 percent real growth and an average of 5 percent inflation, we could reasonably expect the stock market to deliver around 13 percent growth in return and dividends next year from this level."

TOP HOLDINGS The Jakarta-based fund company was established in 1991. At the end of July, SIMI had $6.9 billion under management, with around 75-80 percent invested in equities and the remaining in fixed income assets.

Investment decisions in each SIMI fund is based upon contributions and ideas from the investment team of analysts and portfolio managers.

Astra International , Indonesia's biggest listed firm and main vehicle distributor, Bank Mandiri and Bumi Resources are among the main holdings of its equity funds, according to data on its website.
Property stocks are a top pick for Schroders' Indonesian funds, due to the rising levels of middle-income earners and low interest rates, Boenawan said.

Indonesia's central bank held its benchmark overnight policy rate at 6.75 percent on Tuesday for a sixth straight month after July inflation slowed to a 14-month low.
"Property sectors have also been experiencing a surge in demand and prices mainly on the back of rising middle income affluence, low interest rate, and rising direct investments in Indonesia," Boenawan said.

Indonesia expanded at a robust 6.5 percent on year in the second quarter of 2011, at a time when the outlook for the global economy is increasingly uncertain.

"Despite the rising demand and prices in the real physical market, the prices of the property stocks have yet to fully reflect its fundamentals," he added.

Least favoured Indonesian equities for Schroders include telecommunication firms due to a crowded business space, and cement companies.

"For telecommunication, the industry is crowded and has been experiencing fierce price competition since the last 3 years," Boenawan said.

"For cements, although demand is quite robust especially given the rising property prices, the industry has not been able to raise prices further without inviting competition from imported clinkers."

19 comments:

attayaya-cerpen said...

hmmmm belom ngerti banget masalah saham
masih mengawang

Wisata Murah said...

For telecom competition is very tight indeed occur.
but to calculate the stock market, I do not understand

WebbieLady said...

What a patrioitic post! But it's dropping? Ohhh oh... Hopefully it will rise again. I never know that the best SE in SE is JSE... Great info on business over there...

WebbieLady said...

Good luck, SE. It seems that Singapore and China are the top ones and hopefully the rest can follow these 2 rich models...

colson said...

The stockmarket is a casino. However it's pretty sure the Indonesian economy will keep on growing in the next decades, so in the long run profits can be made if you buy now.

Iskaruji dot com said...

Oh...is here any relationship between this issues with the breakin' out of gold prices?..consequently, it's out of my field..hehe. Nice post and happy blogging!

smp 3 lembang said...

saya juga masih buta pak kalau maalah Saham

Multibrand said...
This comment has been removed by the author.
Multibrand said...

@Attayaya-Cerpen,
Tidak kenapa, anda kan punya kelebihan yang lain.

@Wisata Murah,
Like anything in life we can always learn about stocks if we want to.

@WebbieLady,
My post is limited to STOCK EXCHANGE in SOUTH EAST ASIA by quoting the report of The Economic Times.
If we talk about ASIA of course there are bigger ones : Japan, China, India, and South Korea.

Re: Singapore, its income per capita maybe very high BUT its population is only around 4 million.
Whereas Indonesia 240 million with an income per capita of around US$ 2,500 per capita.

@Colson,
Beside bets and luck, business in stock exchange must also rely on careful calculation.

@Iskaruji,
Thank you for your comment.

@Smp3Lembang,
Memang saham belum banyak diketahui masyarakat kita.

Filipina Ini said...

Yes, the power by numbers.... like China and India... I never knew Indonesia is that big... I thought it's population is around 100Mio...

However, I always believe that a nations progress should a progress where most of each individual citizen is satisfied rather than power or progress as whole only because it population is big...

Webbielady said...

Yep, but singapore and Malaysia are SEA nations, right? And then Stocks are also indirectly affected by and affects other items such as gold... During the crisis, there was a shortage of gold bars in Nethrlnds as people were so afraid to invest their money or to buy stocks and bonds...

Multibrand said...

@Filipina,
I agree that the progress of a country should be determined by whether or not most of individual citizens are satisfied with the said progress.

@WebbieLady,
Stock exchange doesn't reflect the actual economic condition of a country.

Fahrizi Noer Fajar Azman said...

saya engga ngerti sama sekali tentang saham...

saya belum pernah belajar sih :)

Multibrand said...

@Fahrizi,
Sebenarnya tidak terlalu sulit untuk dipelajari hanya perlu tekun dan extra hati2.

Umihoney said...

Assalamualaikum Harry,

I have redeem all my shares and put them in gold a month back during the Arab spring coz I don't have the time to read the market and my broker was kinda lazy to update me too.

Market at the moment is really volatile and very sensitive to political situations and yes you are right in saying that it does not reflect true economy.

Buy only when the company has strong fundamentals and not coz its cheap unless like colson said we are willing to gamble.

Thank you for sharing dear Harry.
Umi

TUKANG CoLoNG said...

jepang dan amerika mulai krisis, kayaknya kekuatan pasar bakal berputar. Indonesia memang semestinya bersiap. tapi liat dari pemerintah dan budaya yang tengah beredar di Indonesia, yang kurang produktif condong konsumtif, saya jadi raguu

Multibrand said...

@Umihoney,
Yes the stock market nowadays is volatile and very sensitive to political situation.
Therefore the stock market does not reflect the true economic condition of a country, especially in Indonesia. I we are not careful it would just be like gambling.

@TUKANG CoLoNG,
Perekonomian negara2 Eropa dan AS yang sedang kacau saat ini membuat kita harus extra hati2 agar tidak tertular.

Joseph said...

If they have a certain product that can help their economy grow, I think they should focus more on it. It'll help them in a lot of ways.

cheap cigarettes

forex training said...

I think the stock market in Indonesia is due for recovery in 2012. I see local blue chips attracting more investors.