Shares of listed firms to grow by 21 percent

Shares of listed firms to grow by 21 percent

JAKARTA (JP): Market research conducted by Kleinwort Benson
Ltd. predicted that the earnings per share (EPS) of public
companies listed on the Jakarta Stock Exchange (JSX) are to grow
by 21 percent this year, down from an estimated 35 percent last
year.

The estimated EPS for Indonesian companies is below Taiwan's,
which is predicted to remain at 25 percent, while in some other
Asian countries EPS growth might even decline into a range of 12
to 20 percent.

Director of Kleinwort Benson Alistair Scott said last week
that with the earnings growth slowing down, the average price
earning ratio for stocks listed on the JSX will average out at
17.2 times, as compared to 24 times last year.

The research also predicted that the JSX Composite Index would
close at a level between 580 and 600 point this year. The index
hit 570 points yesterday.

An analyst from a local brokerage firm agreed there would be a
decline in EPS growth, but disagreed with the predicted decline
of the price earning ratio.

The analyst told The Jakarta Post yesterday that the main
reason for the slow down in the growth of earnings is the curbing
of credit expansion, which means that it will be difficult for
most companies to get funds for their production expansion.

"However, I don't think that the price earning ratio will also
decline. It could be true if we assumed that the share prices
will be constant at last year's levels. I think the prices of
bluechip stocks will grow further so the price earning ratio will
also increase," he contended.

The analyst also predicted that the JSX Composite Index will
hit 600 points in the first quarter.

A director of PT Asian Development Securities, Ikada, told the
Post that much money from the United States was still flowing
into Indonesia despite tighter competition for funds from other
Asian countries.

"Although there is still a chance for price increases in the
U.S. market, quite a large portion of the idle funds of American
investors will go overseas, particularly to Asia, because those
investors need to diversify their investments," Ikada said.

Moreover, they have to go somewhere after booking big gains
last year, Ikada said.

Ikada estimated that consumer goods and retail stocks as well
as some big-share stocks in each sector will become the major
targets of American investors.

Scott noted that international investors were actually
cautious about the Indonesian economy following some bad news on
the trade balance and current account deficit, and also the
property assets bubble earlier this year.

However, he said that there are some key factors which will
work to Indonesia's benefit among international investors, such
as political stability, a solid history of economic growth,
liberalization which has spurred industrialization, and a strong
resource base.(08)