When does a market drop become a buying opportunity?
Friday’s market fall (4.5 per cent as we write) takes the Indonesian index significantly back off its recent record high (which was achieved just 5 days ago). Analysts seem confident that it is a temporary blip.
“There’s panic, global panic because of the US. I guess in Indonesia it will just be temporary because our market is more resilient”, said Edwin Sinaga of Financorpindo Nusa – a stock brokerage in Jakarta.
“These are short-term flows out. Indonesian fundamentals remain strong: good first half results, low inflation, strong GDP growth, consumer sentiment,” wrote Bernard Thien, president director of CIMB Securities Indonesia.
Even the president is weighing in, according to Bloomberg:
Indonesia’s economic condition is in better shape than it was in 2008 and there’s no need for panic, President Susilo Bambang Yudhoyono said in Jakarta today before a meeting with ministers to discuss global markets developments.
Bank Indonesia, which has doubled its capital reserves to $120bn in recent years, said it was confident the financial system could withstand the shock and the rupiah, along with capital inflows, will resume an upward climb when global markets settle.
“This is entirely driven by external factors”, said Joshua Tanja, head of equities for UBS in Indonesia. “Maybe not yet today, but this should be used as a buying opportunity.”
Wilianto Ie, head of equity research at Nomura in Indonesia also pointed to external factors. He said:
“Indonesia was in line with S&P 500, Taiwan and the rest of Asia. If I look at the economic fundamentals, I can’t see anything going bad. The selling is to do with fear, not fundamentals.”
But he also told beyondbrics, ”I don’t think this is the end. We haven’t found the bottom yet and may not any time soon because things are looking uncertain in the EU and US.”
Who’s feeling plucky?