Indonesia Stocks Enter Bear Market After Losing 20% Since May

August 23, 2013 Leave a comment

Indonesia Stocks Enter Bear Market After Losing 20% Since May

Indonesian stocks fell, with the benchmark index entering a bear market after losing 20 percent from a record high three months ago.

The Jakarta Composite Index (JCI) declined 1.1 percent to close at 4,171.41, the lowest since Sept. 13, 2012. Animal feed producer PT Charoen Pokphand Indonesia dropped 13 percent and was the biggest drag on the index. PT Bank Rakyat Indonesia, the country’s second largest lender by assets, fell 4.4 percent.

A record current-account deficit in the second quarter and worse-than-expected economic growth and inflation data spurred investors to offload stocks and send the rupiah to its weakest level since April 2009. Foreign investors sold a net of $434.7 million worth of equities this week through yesterday.“The market is likely to remain sideways or down.” Laurentia Amica Darmawan, a fund manager at First State Investments, which manages about 5.9 trillion rupiah ($529.4 million), said by phone from Jakarta. “There has been no major catalyst to drive the market up. Investors will wait for the next inflation numbers so they can determine if it has reached its peak.”

Interest-rate sensitive industries including property, construction and automotive are likely to be under pressure in the near term, Citigroup Inc. analysts led by Ferry Wong said in report yesterday. Wong is overweight media, bank and cement stocks as well as some consumer-goods companies. PT Bank Mandiri, PT Bank Negara Indonesia, PT Surya Citra Media, PT Media Nusantara Citra and PT Semen Indonesia are among Citigroup’s top picks.

The slump for the Jakarta index pushed its valuation to 12.3 times projected 12-month earnings, the lowest level since June 2012, according to data compiled by Bloomberg. The measure’s valuation reached 15.9 times on May 20.

The rupiah fell 0.4 percent to 10,818 per dollar, after reaching 10,826 earlier, its weakest level since April 2009. The yield on 10-year government bonds fell to 8.42 percent, prices from the Inter Dealer Market Association showed.

To contact the reporter on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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