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๐๐ก๐ ๐๐๐ ๐๐๐ฏ๐ข๐๐ฐ ๐จ๐ ๐ ๐๐๐ซ๐ฎ๐๐ซ๐ฒ ๐๐๐๐
The World Urgent Alerts is On
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In response to the official announcement made by the WHO as well as the IMF on the urgency of the impact of the Coronavirus to the countriesโ economy, we alter down our expectation on the JCI for this year. The revisions seems unavoidable as the impact of the virus breakouts that originated in China have halted economic activities in significant ways.
Late last month, the IMF revised down China economic growth to 5.6% YoY this year from 6.0% YoY previously. As China is the second largest economy in the world, the slowing down would effect its trading partners seriously. The IMF also cut down global growth estimate this year to 3.3% YoY(previously: 3.4% YoY)
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The JCI Revised-Down to 6,305pt
We keep our BUY recommendation on the JCI within 12M horizon,however,ย we trim corporate earnings growth estimate of 12% YoY previously assumed, to the current rate of ย 7% YoY. The figure is based on the average of historical growth rates of 3 (three) ย largest sectors by market capitalization (see Chart 1).ย Furthermore, we currently maintain the price valuation of 18.8 x estimated earnings for the JCI which has been derived ย from 3 (three) years historical average multiples (see Chart 2)
Shorter term, however, cautious approach for risks to the JCI to include (1) slowing down the average down activities and (2) higher weight should be applied to the more defensive sectors
Sectors choice
We maintain our diversification base recommendation that are Consumer. Trade, Automotive, Coal Mining. Monthly performance of our picks at present look unfavorable, nevertheless, volatility gives opportunity to lower down cost, as viewed from the February lowest and highest price levels (see Chart 6).
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ย February Excerpts
During the month of February this year, the JCI slipped by 8.2% and make up to 13.4% year-to-date to 5,453pt (see Chart 3). With that, foreign investors recorded a net sell of IDR4.7tr during the month and on year-to-date, as investors worldwide opt to less risky assets (see Chart 4). At the other end, the price trend of main commodities except that of gold have been in the downward trend (see Chart 5).