Strategizing the Proper Balancing Act
Key Takeaways:
• The slowdown in the global economy seems inevitable and this may affect domestic prospect. Consequently, policy-makers and investors need a proper balancing act.
• Global : US & JP may have lower growth outlook, while for EU output to likely contract. On the other hand CN economy is expected to rebound, yet policy complication around pandemic measures exit strategy may hinder its growth potential.
• Domestic : firming monetary policy to anchor inflation and stabilizing IDR while ensuring fiscal consolidation smoothly would be the key macro-policy for 2023. Bold policy reform to attract investment is crucial to strengthen Indonesia's competitiveness.
• While we believe Indonesia is less vulnerable from external shock right now, recent macro backdrop remain challenging.
• Fiscal consolidation to limit an extreme yield spike in government bond, whereas supply side risk in corporate bond rising. In equity challenge to maintain margin persist yet liquidity and gearing stay sound for the case of companies under our universe.
• We believe a balance portfolio would deliver better risk adjusted return. Yet we still could optimize the process by looking at any opportunity in each asset class.
• We prefer short-term treasury asset as well as short-term duration portfolio for fixed income instrument.
• For equity, our top picks : 1) AUTO; 2) BBNI; 3) BBRI; 4) EXCL; 5) ICBP; 6) KEEN; 7) MAPI; 8) SMGR.
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