Shares of listed firms to grow by 21 percent<\/p>\n
JAKARTA (JP): Market research conducted by Kleinwort Benson
\nLtd. predicted that the earnings per share (EPS) of public
\ncompanies listed on the Jakarta Stock Exchange (JSX) are to grow
\nby 21 percent this year, down from an estimated 35 percent last
\nyear.<\/p>\n
The estimated EPS for Indonesian companies is below Taiwan's,
\nwhich is predicted to remain at 25 percent, while in some other
\nAsian countries EPS growth might even decline into a range of 12
\nto 20 percent.<\/p>\n
Director of Kleinwort Benson Alistair Scott said last week
\nthat with the earnings growth slowing down, the average price
\nearning ratio for stocks listed on the JSX will average out at
\n17.2 times, as compared to 24 times last year.<\/p>\n
The research also predicted that the JSX Composite Index would
\nclose at a level between 580 and 600 point this year. The index
\nhit 570 points yesterday.<\/p>\n
An analyst from a local brokerage firm agreed there would be a
\ndecline in EPS growth, but disagreed with the predicted decline
\nof the price earning ratio.<\/p>\n
The analyst told The Jakarta Post yesterday that the main
\nreason for the slow down in the growth of earnings is the curbing
\nof credit expansion, which means that it will be difficult for
\nmost companies to get funds for their production expansion.<\/p>\n
\"However, I don't think that the price earning ratio will also
\ndecline. It could be true if we assumed that the share prices
\nwill be constant at last year's levels. I think the prices of
\nbluechip stocks will grow further so the price earning ratio will
\nalso increase,\" he contended.<\/p>\n
The analyst also predicted that the JSX Composite Index will
\nhit 600 points in the first quarter.<\/p>\n
A director of PT Asian Development Securities, Ikada, told the
\nPost that much money from the United States was still flowing
\ninto Indonesia despite tighter competition for funds from other
\nAsian countries.<\/p>\n
\"Although there is still a chance for price increases in the
\nU.S. market, quite a large portion of the idle funds of American
\ninvestors will go overseas, particularly to Asia, because those
\ninvestors need to diversify their investments,\" Ikada said.<\/p>\n
Moreover, they have to go somewhere after booking big gains
\nlast year, Ikada said.<\/p>\n
Ikada estimated that consumer goods and retail stocks as well
\nas some big-share stocks in each sector will become the major
\ntargets of American investors.<\/p>\n
Scott noted that international investors were actually
\ncautious about the Indonesian economy following some bad news on
\nthe trade balance and current account deficit, and also the
\nproperty assets bubble earlier this year.<\/p>\n
However, he said that there are some key factors which will
\nwork to Indonesia's benefit among international investors, such
\nas political stability, a solid history of economic growth,
\nliberalization which has spurred industrialization, and a strong
\nresource base.(08)<\/p>",
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