STOCKS NEWS INDONESIA-Citi sees defensive, selective buying in second half
Citi Research said it has turned more defensive in its stock selection as weak first-half results, the absence of rate hikes, lower forex reserves and a widening current-account deficit (CAD) have together weakened the rupiah.
"Outflows from equity and bond markets have respectively hit $3 billion and $2 billion in the past 3 months. Although pressures could persist in the short term, we remain positive in the medium term with the CAD to improve in the third quarter," Ferry Wong, Citi's Jakarta-based head of research said in a note on Thursday.
The research house also said that interest rate-sensitive sectors such as property, construction, and autos will be under pressure until inflation and interest rates peak. It prefers stocks in defensive sectors such as media, banks, cement and selected consumer companies.
"Bank, media and cement posted more than 15 percent net income growth. Operating and net profits of our Indonesia universe grew merely up 3 percent year-on-year," he said.
Citi's top picks included state lenders Bank Mandiri and Bank Negara Indonesia, TV operators Surya Citra Media and Media Citra Nusantara and cement maker Semen Indonesia.
The Indonesian banking index was down 3.14 percent, while the broader index was down 2.38 percent.
1121 (0421 GMT) (Reporting by Andjarsari Paramaditha,; Editing by Supriya Kurane)