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Sabtu, 26 April 2014

INDONESIA BUSINESS TODAY

Consumer Goods Makers, Banks Among Top Stock Picks of Indonesian Fund Managers


investors are likely to target buying shares in consumer goods makers and banks in Indonesia’s equity market as the economy continues to grow on rising personal spending, shrugging off concerns of borrowing costs rising on the back of a pick-up in inflation. Fund managers contacted by Jakarta Globe said they would put their money in consumer-related stocks and financial stocks as their main trading bets this year. Jeffrosenberg Tan, who helps manage funds at Sinarmas Asset Management in Jakarta, said that demand by the country’s consumers for snacks and other basic food staples during the elections will increase. “I think consumer goods would have a good year as we are having the elections and with the recent flooding, sales at consumer good companies are likely to increase,” Jeffrosenberg told the Globe on Friday.
He declined to mention his best picks. Major consumer goods companies in Indonesia include Indofood Sukses Makmur and Indofood CBP Sukses Makmur, Mayora Indah and Unilever Indonesia. Shares of Mayora, which sells brands of biscuit such as Marie Roma, Slai O’lai, Better and Sari Gandum, rose 0.6 percent to Rp 27,015 on Friday last week compared with a 1.3 percent decline in the main stock measure, the Jakarta Composite Index. For 2013, Mayora’s shares rose 54 percent compared to the JCI’s 1 percent drop. Shares of Indofood, which closed unchanged at Rp 7,275 on Friday, have risen 10 percent this month. Unilever Indonesia declined 1.8 percent to Rp 28,075 on Friday, but rose about 8 percent this month.
Unilever’s consumer products range from shampoo and soap to ice cream and bottled water. Some economists in Jakarta have said that legislative and presidential elections from April to July will likely prompt a spending spree by political parties to entice more votes.
Personal spending accounts for about half of Indonesia’s economic activity. Nurdiaz Pattisahusiwa, chief investment officer at Manulife Aset Manajemen Indonesia is recommending some banks for investors. Nurdiaz, who helps manage Rp 44 trillion ($3.6 billion) in assets at Manulife, said that amid high interest rates this year the country’s largest banks managed to maintain performance thanks to their ability to manage costs.
 Banks have been impacted by the rising interest rate,” said Nurdiaz . However, not all banks are equal,” he said, noting that large banks had better loan-to-deposit ratios, allowing them to maintain loan expansion and boost profit. Net income at 120 commercial banks in Indonesia grew at a slower pace in the first eleven months of last year as they coped with high interest rates that have continued into 2014. Combined profit at those lenders rose to a total of Rp 98.5 trillion in the January-November period last year, up 16 percent from the same period a year earlier, data from Bank Indonesia, the central bank, showed on Friday.
The central bank increased its benchmark interest rate by a total of 1.75 percentage points to 7.50 percent last year as part of efforts to halt inflation from accelerating, curb domestic demand and contain the rupiah’s decline against the dollar.
The rupiah lost 26 percent of its value last year, and a weak rupiah makes imports more expensive but at the same time boosts exporters’ competitiveness. Nurdiaz said that investors in the stock market are buoyed by general elections this year, as spending tends to increase. In an election year, stock indexes tend to increase, as investors love a ‘reform story.’ This is true in China, this is true in India, this is also true in Japan.”
In past election years, the JCI has climbed as high as 60 percent, and Nurdiaz expects it to gain 10 percent to 22 percent in 2014.  The JCI has risen 3.8 percent so far this year. Spending from candidates will boost money circulation and domestic demands,he said. Media reports estimated Rp 40 trillion of additional spending from legislative and presidential candidates this year.

Nurdiaz’s picks are in the consumer and media sectors, which would benefit from spending in the general election. The infrastructure sector, cement and heavy machinery will also benefit if leading presidential candidates are consistent with their campaigns to boost the country’s infrastructure,” Nurdiaz said. Meanwhile, spending in the automotive sector and property sector would tend to be flat, according to Nurdiaz. Amid tighter liquidity conditions, consumers tend to delay big spending [on items] such as a car or a house.”

source : jakarta globe

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