Keeping Up with Recent Market Pulse
Key Takeaways
• FFR hike by +50 bps caused market turbulence, Wall Street indexes fell to bearish zone with tech stock suffer the most
• Outflows from equity has erased JCI return from 10% to only 3% YTD, yet still ranked 2nd in APAC driven by : 1) continuous recovery; 2) solid EPS growth; 3) commodity boom and 4) still manageable inflation compared to other countries. Be cautious of highly volatile market going forward.
• BI has room for 3x rate hikes FY22F assuming continues increase in core inflation and +4.36% YoY increase in CPI FY22F driven by volatile and adj. gov’t prices.
• JCI lost -2.5% during FY18 tightening cycle. Our stock universe (>50% JCI weight) was traded down -8.3% at the same time. Stocks from companies with high leverage and weakening EBITDA/IntExp suffered the most.
• Solid earnings in 1Q22 (+38.0% YoY/26.0% run rate), driven by : 1) banks; 2) stocks related to commodities and 3) property.
• Strategy amidst volatility : reduce bank holdings, raise cash, focus on company leverage ratio.
• Our top picks : ASII, ARNA, BBRI, BMRI, BSDE, CTRA, DSNG, ERAA, MAPI, UNTR.
Disclaimer On
