Analyst sees nice deals in RI stocks
Analyst sees nice deals in RI stocks
HONG KONG (Reuters): Regional investors are overplaying
political risk and passing up bargains in Southeast Asian
equities, including Indonesia, says Aaron Pong, a director of
fund managers RBC Investment Management (Asia) Ltd.
Pong says Indonesia and the Philippines offer the best buying
opportunities among regional equities as interest rate-sensitive
stocks run out of steam, the World Trade Organization (WTO) story
is factored into many China stocks and Thailand's equity market
has already had a good run this year.
"Obviously Indonesia is only for very high-risk tolerant
investors," said Pong, whose company manages US$300 million worth
of assets in Asia excluding Japan.
"I think there is more than a 50 percent chance that Wahid
(President Abdurrahman Wahid) won't survive. But regardless of
whether he goes or not I would focus on companies with strong
levels of cash, low gearing and strong earnings like the two
tobacco stocks because they will prosper whoever is president."
Indonesia's two key tobacco firms are PT Gudang Garam and PT
HM Sampoerna
If touting Indonesia seems foolhardy, Pong does have a
rationale.
While political crises, social unrest and earthquakes dominate
the headlines, consumer spending is robust and Jakarta has
upwardly revised its gross domestic product (GDP) forecast for
this year to a possible six percent.
GDP growth last year was about 4.5 percent and in 1999 was
zero.
"We think the market has digested the bad (political) news and
that the rupiah is undervalued," said Pong. As a net exporter of
oil the country should also benefit from the recent rise in the
oil price, he says.
His stock picks, however, are confined to just a handful of
companies.
In addition to the two tobacco plays, the other preferred
Indonesian counters are domestic phone operator PT Telekomunikasi
Indonesia and international phone company PT Indosat, both of
which will be privatised this year, and its biggest car maker
Astra International as car sales in the country are buoyant.
"You have to stay with the most liquid stocks because those
are the ones foreign investors are going to buy first when they
go back to the market," Pong said.