[Kabar-indonesia] Analyst bullish about Indonesia stock market

[Joyo at aol.com]

Associated Press 
August 13, 2006

Analyst bullish about stock markets in Indonesia

HONG KONG (AP): Indonesia is likely to continue outperforming other Asian 
stock markets over the next 12 months because of its declining interest rates, a 
trend that will boost consumption and overall economic growth, said Manulife 
Asset Management (HongKong) Ltd. senior portfolio manager Manish Bhatia.

"Our expectation is that Indonesia will continue reducing interest rates and 
as interest rates come down, consumption can pick up and that will become a 
solid leg for the economy to stand on," said Bhatia, who helps manage around 
US$450 million (euro352million) in assets in Asia-Pacific funds.

On Tuesday, Bank Indonesia cut its benchmark rate by 50 basis points to 11.75 
percent, the biggest reduction in borrowing costs in more than three years, 
to revive consumer spending and spur economic growth. The central bank said the 
ongoing decline inconsumer prices will allow it to continue cutting its 
one-month interest rate further in the coming months.

Indonesia recorded on-year inflation of 15.15 percent in July, down from 
June's 15.53 percent. Inflation peaked at 18.38 percent in November. Many analysts 
expect the benchmark rate to settle at around 11 percent by year-end.

Stronger consumption will allow Indonesia's economy to strengthen even if its 
exports falter due to the possibility of a U.S.-led slowdown in global 
economic growth, Bhatia said, adding that the full effects of lower interest rates 
will become clearer in 2007.

"The potential to pump prime the economy through lower interest rates is 
highest in Indonesia," Bhatia said, comparing the monetary easing in that market 
with others in the Asia-Pacific region.

Last month, Indonesian Minister of Finance Sri Mulyani Indrawati said the 
economy likely grew 4.59 percent on year in the first six months of 2006, slower 
than the 6.3 percent growth in the same period last year.

That suggests that the government's full-year target of 6.2 percent may be 
difficult to achieve. The economy grew 5.6 percent in 2005.

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Joyo Indonesia News Service
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