JAKARTA, Jan 16 (Reuters) - JPMorgan Chase & Co on Monday upgraded its call for Indonesian stocks to “neutral” from “underweight”, partially reversing a move it made in November.
The Indonesian government cut its business ties with JPMorgan after the U.S. bank downgraded its investment recommendation on Indonesian stocks to “underweight” from “overweight” in a November research note.
“Redemption and bond volatility risks have now played out, in our view. Bond volatility should now decay allowing us to partially reverse November’s tactical moves including upgrading Indonesia to neutral,” its equity research team wrote in a note sent to clients on Monday and seen by Reuters, referring to $15 billion of capital flows out of emerging markets’ bonds and equities after the U.S. presidential election in early November.
JPMorgan’s research team said “Indonesia’s macro fundamentals are strong, with high potential growth rate and low debt/GDP with economic reform. Within Asia it was the biggest beneficiary of bond inflows.”
Indonesia’s main benchmarket index has dipped so far this year after gaining more than 15 percent in 2016.
Reporting by Gayatri Suroyo; Editing by Kim Coghill
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