CLSA (KZ) 8 December 2015 – Let’s recap six reasons why we have become more bullish on Indonesia:
- Better policy direction. Government’s policies are more clear post cabinet reshuffle – cutting bureaucracy, deregulation and certainty on minimum wage – from our recent company visits – we have learned that the time to obtain licenses has been cut in half – for real.
- Economy stabilizing. From a low base, we see improvements in cements, auto and retail sales
- Bank Indonesia (BI) easing. BI has commenced easing and done pretty much everything BUT cutting the benchmark policy rate – relaxation of LTVs, reserve requirement easing, etc.
- Indonesia could see largest rate cut in Asia in 2016. Tony Nafte has been banging on the table that IDR stability post Fed hike will give Bank Indonesia ammunition to embark on the largest rate cuts in Asia (75bp rate cut)
- Land clearing. Investors have generally been surprised that govt infra spending this years is up 25-30% this year. Last week Sarina points out that land acquisition budget tripled this year and realization is 93%
- Visits to Indonesia. We are seeing more request for calls with corporates, analysts and models. We have investors still coming company visits up until December 19 – something we did not see last year.