UOBKH Indonesia (24June): Election is only two weeks away, weakness = opportunity to buy Indonesia

The USD weakening should be positive for Asia/Indonesia, oil/commodity, but all eyes will be on Fed meeting tonight so sentiment. The Reuters/Jefferies CRB Index gained 1.5 percent in New York yesterday, snapping its two-day, 4.2 percent decline. I know sentiment in the regional market has been jittery lately, but this correction in the market is a good opportunity for those who wants to increase weighting in Indonesia. Reminder that the Presidential election on July 8, is only two weeks from now and SBY is still the likely winner! Various surveys show incumbent President SBY has between 50-70% vote thus it is still very llikely that there will only be one round of election (unless SBY gets less than 50% vote, then the top 2 candidate will go to the second round of election).

So this is the best time to position for the next 5 years of stable politics in Indonesia. President SBY's first term was focused on fighting corruption, reforming the government and the legal system (both justice department and law enforcement). His second term, if he is elected, will focus on "DEVELOPMENT". Now that the framework is ready, SBY's second term should see a more aggressive spending on infrastructure and development. His political power is now much stronger than before as his party now controls the largest seat in parliament.

Indonesia with stable politics, resilient economy, declining interest rate and trading at 12.6x trailing 09 PER is looking attractive. Concensus is forecasting 9% EPS growth but more earning upgrades possible coming from CPO and resource sector.

Below is research's TOP PICK for Indonesia