Minggu, 12 September 2010

CLSA Mango Mania

The market charged ahead in full steam setting yet another record high at 3,217 yesterday. Foreign investors have stepped up buying giving support to the big cappers. Turnover over the last couple of days has been surprisingly good even tough it will be a short week for Indonesia. Market will be closed from 8 - 14 August for Hari Raya holiday. We may see some profit taking from the local camps ahead of long holiday.

In his latest presentation “Mango Mania”, Nick Cashmore has just laid out reasons to own ASEAN (please see attached). As a region, ASEAN has an interesting history. The oldest university in Asia is located in the Philippines (Santo Tomas, 1611). The region also boasts the largest Buddhist monument in world (Indonesia, Borobudur 9th century). The longest reigning monarch in the world is in Thailand. One of the Asian greatest sport heroes is from this region: Manny Pacquiao from the Philippines.

Of course the region faces many challenges (high logistic costs and weak institutional structures among others) but still there many more positive attributes and potentials.

Economically, ASEAN generates GDP of US$1.6tn and has doubled since 2005. GDP is about the same size of India. Per capita GDP is approaching US$3,000. The region is globally competitive is soft commodities and is among one of the least indebted areas in the world (pls see the chart below). Plenty of rooms to add leverage into the system. Clearly, ASEAN is a force to be reckoned with.

SE Asians also have the knack for rapid reproduction. Demographics is also looking great with a population of 600mn of whom more than half are less than 30 years old. To put it into perspective, within two decades SE Asia will be larger than Europe in terms of population. And in the next 15 years, SE Asia will add as many people as China.

A stockbroker can make a nice career broking ASEAN market these days. SE Asia is now more liquid and meaningful for investors. Combined market cap is US$1.5tn with daily average turnover of US$3.8bn.

Two blue chip Indonesian stocks mentioned in the report are BCA (BBCA IJ) and Indocement (INTP IJ). For mid and small cap ideas, we like Holcim (SMCB IJ) and biscuit maker Mayora (MYOR IJ).

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