CIMB Strategy – Indonesia: View From The Ground – Hari Raya gift

We maintain our bottom-up index target of 3,430 and Overweight position on the Indonesian market. The JCI had hit a new high on the eve of the long Hari Raya holiday, trading slightly above its 3-year moving average for the first time since Aug 08. External factors aside, August’s lower-than-expected inflation and earnings upgrades after four months of downgrade should support a further re-rating, in our view. Fundamentally, the consumer and infrastructure-related sectors remain key Overweights despite their YTD outperformance. We expect market catalysts from a decline in cost of equity and further earnings upgrades.