JAKARTA. Financial institution Morgan Stanley gave an "overwheight" view on the Indonesian equity market for the 2019 period. Amid the uncertainty in the global economy, proactive government policies that are projected will restore investor interest in the stock market and domestic financial security next year.
Based on the analysis received by Kontan, Thursday (1/11), Morgan Stanley projects the growth of Indonesia's net profit (EPS) next year will increase by 14%. This is supported by the performance of nonbank issuers that will increase in line with nominal GDP growth. The performance of bank issuers that dominate the index capitalization is also expected to increase as credit growth is supported by the private sector after the general election.
This optimistic view, according to Morgan Stanley, is based on government policy steps that are considered quite positive. Bank Indonesia (BI) is proactive in facing the strengthening of the US dollar and monetary tightening in the United States.
First, BI shifts its focus from growth to stability. Second, BI took a "ahead the curve" attitude by hoisting interest rates of 150 bps so far this year. Third, make macroprudential policies on mortgage loans (KPR).
In addition to monetary policy, Morgan Stanley also observed the government's fiscal policy in order to maintain the current account balance. Among other things, import tariffs on 1,147 consumer goods, the policy of using 20% ​​biodiesel (B20), reviewing imports of capital goods, and delaying several infrastructure projects.
However, Morgan Stanley still predicts economic growth to slow in 2018 and 2019. In line with the consensus, economic growth is projected at the end of this year at 5.2% and will remain the same until next year. In fact, before the consensus predicted Indonesia's economic growth in 2019 could reach 5.5%.
Meanwhile, the current account deficit (CAD) in quarter III-2018 is estimated to peak to US $ 9.4 billion - US $ 10.8 billion. Meanwhile, CAD is predicted to reach 2.4% of GDP by the end of 2018 and narrow to 2.3% of GDP by the end of 2019.
Meanwhile, in the next year, Morgan Stanley predicts the MSCI Indonesia index will experience an upside of at least 7% from its current position to the level of 6,906 at the end of the year. (AM/MS)