Indonesia Daily Focus December 7, 2020
Indonesia Strategy – 2021 Outlook: Gearing up for the dawn
We
set our base case for end-of-2021 JCI target at 6,880 (around 17%
upside potential) on the back of earnings growth recovery and investors’
preference for emerging market equities asset class amid the continued
weakening in USD currency in 2021.
Indonesia
is to benefit from the recovery in commodity prices as China, the
world’s biggest consumer of commodities, continues to recover.
USD
is likely to continue weakening in FY21 on the back of the US’ twin
deficits, i.e. CAD and fiscal deficits, which should be positive for
commodity prices as they have a negative correlation.
Uncertainties
have gradually faded on the back of recent COVID-19 vaccine development
and the clearer outcome of the US’ presidential election.
We
increase our exposure to bank (i.e. BBNI), commodity, mainly coal and
gold mining (i.e. UNTR), and poultry, (i.e. JPFA). Our monthly top picks
for December lean towards bank, poultry, and commodities (CPO, nickel,
coal, and gold), making way for BBRI, BMRI, BBNI, JPFA, ANTM, INCO,
LSIP, and UNTR.
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