UBS ups Indonesian equity ratings<\/p>\n
KUALA LUMPUR (Reuter): European firm UBS Global Research said
\nit has upgraded its equity market ratings for Malaysia and
\nIndonesia.<\/p>\n
\"Malaysia is now on an overweight (previously neutral) and
\nIndonesia on a neutral (previously underweight) recommendation in
\nthe UBS global emerging markets portfolio,\" UBS said in a
\nresearch paper issued from London.<\/p>\n
\"Our risk premium model suggests that the two markets are at
\nfair value on our worst case scenario -- earnings growth for the
\nnext two years negative in dollar terms,\" it said.<\/p>\n
This compared with its recent forecast of 10-20 percent
\nearnings growth in dollar terms for the two countries.<\/p>\n
\"Although there is downside risk in both markets and
\ncurrencies in the short-term, we recommend that investors use
\nfurther weakness as an opportunity to buy,\" the paper said.<\/p>\n
It said that among countries in the Association of South East
\nAsian Nations (ASEAN), Malaysia and Indonesia offered relatively
\nthe best economic fundamentals.<\/p>\n
\"Currency depreciation and asset price deflation hurts the
\nexchequer, financial system and corporate earnings, but we
\nbelieve that is already being discounted by the equity markets,\"
\nUBS said.<\/p>\n
Malaysia's key stock market index is down 40 percent this
\nyear, while the Jakarta Stock Exchange's has lost around 25
\npercent.<\/p>\n
Both markets are victims of a currency selldown as the
\ncontagion from a Thai economic crisis spread.<\/p>\n
Recently announced measures to correct imbalances in the
\neconomy, caused by protracted periods of fast-paced growth, have
\neased the selling pressure on the two markets.<\/p>\n
The Jakarta stock market has recovered by 24 percent in the
\nlast three days, while the Kuala Lumpur Stock Exchange Composite
\nIndex was up 12.37 percent on Friday.<\/p>",
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"sponsor": "Okusi Associates",
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