Indo's growth story remains the catalyst for JCI as one of the biggest domestic consumption market in the region. Reasons to OVERWEIGHT:
1) Du Pont analysis indicates Indo's 25% ROE is SUSTAINABLE
2) Indonesia's structural decline in the Equity Risk Premium (likely to achieve investment grade credit by 2011).
3) Accomodative Monetary Policy eg central bank has been adopting pro-growth as benchmark rate remain at all time low of 6.5% for 14 straight months.
4) Indo's competitiveness index rating climbed 10 notches to 44 out of 139 countries, above Vietnam and India in a Global Competitiveness Index (CGI)2010-2011; the improvement was helped by resilient & healthy macroeconomicmenvironment
* Our top pick in Indo: Bank Mandiri (BMRI IJ) as an in-direct infra growth play & Indofood (INDF IJ) as the spin-off of unit ICBP will unlock its value.
* Attached is our strategist, Clive McDonnell's latest report, focusing on why we think investors should continue to buy into the Indonesia growth story, but should be turning more cautious on India.
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