Indonesian shares rise to 1-week high, consumer sector to fore
JAKARTA, Sept 9
JAKARTA, Sept 9 (Reuters) - Indonesian shares rose their highest in a week on Monday, with signs that investors were dipping toes back into the market as the past month's plunge in prices started to make some sectors look cheap.
Th main index rose 2.92 percent to close at 4,191.3, the largest daily gain in two weeks, with foreign buyers encouraged by hopes that the U.S. central bank would delay or be less aggressive in tapering its monthly bond purchases.
The index was still 28 percent below its May 21 peak of 5,251.3, and down 5.7 percent since the start of the year.
The big caps index rose 3.7 percent to 700.9, with state-owned firms leading the rally. Cement maker Semen Indonesia soared 7.6 percent to 13,500 rupiah. Telecom provider Telekomunikasi Indonesia jumped 4.3 percent to 2,075 rupiah and utility firm Perusahaan Gas Negara rose 2.9 percent to 5,400 rupiah.
With further falls possible, investors are moving into defensive sectors such as consumer and utility stocks.
"Whatever the conditions, people would still buy basic needs such as toiletries, food, cigarettes or go to the groceries store. People also need to use roads, electricity and gas," said Alvin Pattisahusiwa, investment director at Manulife Aset Manajemen Indonesia.
In contrast to the broader market, consumer stocks are up 17 percent for the year, though that is a long way off their peak in May, when the sub-index was up 44 percent.
Harry Su, head of equities at Jakarta-Based Bahana Securities said that consumer stocks had moved higher as investors were on the lookout for bargains in a promising sector. Packaged food producer Indofood CBP, high-end retailer Mitra Adiperkasa and Telekomunikasi Indonesia are among Bahana's favoured picks.
Investors were likely to stay away from those sectors, notably banks and property, seen as vulnerable to the current environment of high inflation, high interest rates and high currency volatility.
NOT MUCH LEFT TO GO
"Indonesia's correction looks sharp, particularly in U.S. dollars, and may seem overdone. However, we believe that it is too early for bottom fishing, although selective opportunities may begin to appear before the overall market bottoms," Morgan Stanley said.
Since the beginning of this year, 10 trillion rupiah ($903.75 million) of foreign money has left Indonesian stocks. This includes the total erosion of the 18.8 trillion rupiah inflow in first quarter.
"We believe that the funds outflow should be minimal going forward given that all of 2013's net foreign inflows are out," said Su, noting that 85 percent of 2012 foreign net fund inflows into Indonesia were already gone.
Nomura Equity Research said that Jakarta stocks were trading at the lower end of their historical valuations, though not yet as cheap as they were at the height of the global financial crisis in 2008. Macroeconomic conditions and sentiment are not as bad as they were then, due to better commodity prices and fewer global risks.
With foreign investor's bailing out the stock market, stocks have suffered instant PE-revaluations but have yet to hit rock-bottom. Equities are trading at PE 13.25, still higher compared to Thomson Reuters South East Asia Index benchmark index at 10.67, according to Thomson Reuters Eikon data on Sept 6.
($1 = 11,065 rupiah) (Reporting by Andjarsari Paramaditha, Editing by Nachum Kaplan and Simon Cameron Moore)
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