Indonesia Stocks Are a Must Buy for Analysts as Market Rebounds


Indonesian companies are getting some love from analysts.

As the Jakarta Composite Index completed its first monthly gain in six, they pushed the proportion of buy ratings for its shares to about 75 percent on average, the highest in a decade.

Their favorites? Textile company PT Sri Rejeki Isman as well as miners PT Medco Energi Internasional and PT Timah were among those with unanimous buy recommendations, data compiled by Bloomberg show.

The benchmark Indonesian gauge climbed 2.4 percent in July, rebounding from a one-year low as analysts kept an optimistic profit outlook. Foreigners slowly came back to the market, buying $54 million of equities as the nation’s rupiah halted its plunge.

“With the rupiah seen stabilizing, I think investors can start to see value in Indonesian stocks,” said Andrey Wijaya, an analyst at RHB Securities Indonesia. “We are optimistic that consumer spending will recover going forward as the government has pledged to maintain purchasing power through higher subsidy spending for fuel and electricity.”

Of the 597 members of the Jakarta Composite, 164 had at least one recommendation tracked by Bloomberg as of Tuesday’s close. Among the most scrutinized companies — with more than 30 analysts following them — telecom carrier PT XL Axiata was the favorite, with 31 buys out of 32 ratings.

The Jakarta Composite’s valuation of 14.2 times estimated earnings for the next year is lower than its five-year average of 14.8 times, according to data compiled.

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