International | Jul 10 2006
By Terry Hughes
Buoyed by lower inflationary pressures and the Bank of Indonesia’s move to lower interest rates last week, analysts are looking for a period of solid performance from the Indonesian stock market.
The Indonesian central bank began cutting rates back in May, by 0.25 basis points to 12.25%, and after a pause of a couple of months, due to turbulent market conditions, continued the process with a further 0.25 point cut last week.
Local media reports cite Bank Permata investment manager Fendi Susiyanto as saying bank and property stocks are likely to benefit from the rate cut, while a strengthening rupiah could provide a windfall for telecommunication and cement stocks.
Analysts at Credit Suisse are of the view that the Indonesian economy will recover in the second half of 2006, although they expect weak 2H06 results so are recommending investors "accumulate blue chip stocks after the 2H06 results."
They also feel the time is right to "accumulate interest rate sensitive stocks," as they see room for rates to fall to around 10.75% this year, they recommend BCA, Danamon, BII, Astra International, Semen Gresik and Indocement.
