UBS ups Indonesian equity ratings

UBS ups Indonesian equity ratings

KUALA LUMPUR (Reuter): European firm UBS Global Research said
it has upgraded its equity market ratings for Malaysia and
Indonesia.

"Malaysia is now on an overweight (previously neutral) and
Indonesia on a neutral (previously underweight) recommendation in
the UBS global emerging markets portfolio," UBS said in a
research paper issued from London.

"Our risk premium model suggests that the two markets are at
fair value on our worst case scenario -- earnings growth for the
next two years negative in dollar terms," it said.

This compared with its recent forecast of 10-20 percent
earnings growth in dollar terms for the two countries.

"Although there is downside risk in both markets and
currencies in the short-term, we recommend that investors use
further weakness as an opportunity to buy," the paper said.

It said that among countries in the Association of South East
Asian Nations (ASEAN), Malaysia and Indonesia offered relatively
the best economic fundamentals.

"Currency depreciation and asset price deflation hurts the
exchequer, financial system and corporate earnings, but we
believe that is already being discounted by the equity markets,"
UBS said.

Malaysia's key stock market index is down 40 percent this
year, while the Jakarta Stock Exchange's has lost around 25
percent.

Both markets are victims of a currency selldown as the
contagion from a Thai economic crisis spread.

Recently announced measures to correct imbalances in the
economy, caused by protracted periods of fast-paced growth, have
eased the selling pressure on the two markets.

The Jakarta stock market has recovered by 24 percent in the
last three days, while the Kuala Lumpur Stock Exchange Composite
Index was up 12.37 percent on Friday.