Fireblog

Facts about the Indonesian economy:
1. We have a domestic dependant economy
If we look at our companies, only the commodity companies export. The others mainly market their goods and service in the local market. Oil & Gas is no longer a primadona. It currently only accounts 17% of the whole economy.

2. Government is cutting corporate taxes by 7%-10%
The government is trying to lift corporate earnings from state owned companies to get higher dividend. Specifically for state owned companies, the government will push for efficiency and increase price. This has to do with the 2009 elections. I wont go in to further political details on this issue :)

3. Foreign investment, both FDI and via equity market increases all the time.

2008 vs 1998:
Current property price is worth less than it was before the economy crisis of 1998.


Exposure to US (uh oh.. here comes the "R" word) Recession is minimum because Indonesian export to USA is only 15%. Our main export partner is Japan, China, and India.

Let's talk industries:
1. Automotive: it is growing every year.
2. Property: as stated, property price is still low. Added to the government quest for 2009, property will surely rise.
3. Commodities: coal keeps growing. Indonesia has 300 years worth of coal reserve. With oil becoming expensive, coal is a definite alternative (although frowned upon by Mr. Al Gore). Crude Palm Oil is now turned into biofuel. The impact is gigantic in terms of price. Indonesia is always #1 or #2 (switch with Malaysia) in becoming the highest exporter of CPO. So excellent liquidity there.
4. Infrastructure: as with property, infrastructure will be the focus of the government in 2008 (again because of 2009).

Let's talk about the equity market:
In other countries, the stock market compared to time-based savings (bank deposit, etc) is equal. In Indonesia, money invested in the equity market is currently IDR 35 trillion. Time-based savings? IDR 650 trillion! If just 10% of those people in traditional savings switch to equity-based investments, the equity market will have tripled! Even if you are a dumb investor and buy a bluechip, it is a guarantee your asset will grow 200%.

Let's talk Price Earned Average (PER):
PER is basically the time it would take to break even if you only receive dividends. The global market averages at PER 16x. The Indonesian market is at PER 13x. Still have room to grow.

Let's now talk about stock picks :
Investors... this is for you:
1. Banking: its a no brainer; BMRI (wait for upcoming news :), BBRI (best banking company).
2. Commodity: BUMI (great transportation), AALI (foreign investor favorite), LSIP (foreign investor favorite). Sorry to say, TINS, ANTM, INCO will have limited growth this year unless several things happen (this is another story).
3. Infrastructure: TLKM, INTP
4. Misc Industry: ASII

Traders... this is for you:
SGRO, ELTY, CTRP, UNSP

The market won't be as extravagant as 2007, but we will have a healthy growth. 20%-25% growth is a good bet for me.

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