Indonesia most risky stock market, says Morgan Stanley

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South Korea Asian MarketsUS-based investment firm Morgan Stanley said in a report on July 4 that it considers Indonesia’s stock market to be the “most risky” in Southeast Asia, citing vulnerabilities based on capital flight and expensive stock valuations.

Foreign investors have sold about $210 million in assets so far in 2013, data compiled by Bloomberg show. The Jakarta Composite Index is valued at 2.8 times net assets, the highest level among 17 Asia equity measures.

The World Bank slashed its 2013 forecast for Indonesian growth to 5.9 per cent earlier in July, saying it sees cooling domestic demand and slowing commodity exports. The Indonesian central bank also just raised its interest benchmark rate, raising concerns that  loan growth will hurt banks.

The country’s equities recommendation was reduced to underweight from equal weight by Morgan Stanley in the report. CIMB Securities Indonesia also cut its recommendation on the nation’s stocks to neutral from overweight on July 2 and trimmed the year-end target for the Jakarta index to 5,075 from 5,250.

Higher energy costs, combined with monetary policy tightening, will probably hit already weakening investment growth and drag economic expansion to 5.7 percent in 2013, according to Credit Suisse Group AG.

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Reading Time: 1 minute

US-based investment firm Morgan Stanley said in a report on July 4 that it considers Indonesia’s stock market to be the “most risky” in Southeast Asia, citing vulnerabilities based on capital flight and expensive stock valuations.

Reading Time: 1 minute

South Korea Asian MarketsUS-based investment firm Morgan Stanley said in a report on July 4 that it considers Indonesia’s stock market to be the “most risky” in Southeast Asia, citing vulnerabilities based on capital flight and expensive stock valuations.

Foreign investors have sold about $210 million in assets so far in 2013, data compiled by Bloomberg show. The Jakarta Composite Index is valued at 2.8 times net assets, the highest level among 17 Asia equity measures.

The World Bank slashed its 2013 forecast for Indonesian growth to 5.9 per cent earlier in July, saying it sees cooling domestic demand and slowing commodity exports. The Indonesian central bank also just raised its interest benchmark rate, raising concerns that  loan growth will hurt banks.

The country’s equities recommendation was reduced to underweight from equal weight by Morgan Stanley in the report. CIMB Securities Indonesia also cut its recommendation on the nation’s stocks to neutral from overweight on July 2 and trimmed the year-end target for the Jakarta index to 5,075 from 5,250.

Higher energy costs, combined with monetary policy tightening, will probably hit already weakening investment growth and drag economic expansion to 5.7 percent in 2013, according to Credit Suisse Group AG.

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