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Associated Press Foreign Investment in Indonesia Down 07.14.2004, 05:09 AM Foreign direct investment in Indonesia fell by almost 35 percent in the first half of the year, underscoring the troubles facing the country''s economy, the government said Wednesday. The country''s official investment board did not provide any reason for the drop to US$3.05 billion from US$4.65 billion invested over the same period last year. But foreign businesspeople have long complained that the country''s corrupt judicial system and lingering security concerns make investing here unattractive. “Indonesia finds itself with problems over the law and taxation,” said John Arnold, chairman of the British Chamber of Commerce in Indonesia. “It needs to be seen as addressing these issues in a systematic manner so that potential investors can see a road map.” Analysts said that the drop in investment will likely prevent the Indonesian economy from growing beyond its current rate of 5 percent, far short of the pace needed to put a dent in the country''s double-digit unemployment. In a related development, the government said it was optimistic it will reach its target of raising 5 trillion rupiah (US$555 million) this year from sales of stakes in state-owned companies. Deputy State Enterprises Minister Mahmuddin Yasin said that 3.4 trillion rupiah (US$378 million) had been raised this year from sales in the privatization program. The proceeds will be used to help finance the state budget deficit. The government hopes to sell a 30 percent stake in PT Bank Negara Indonesia and a 14 percent stake each in tin miner PT Timah and sister company gold and nickel miner PT Aneka Tambang
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Around Asia''s Markets: Winners in Jakarta contest: investors? Sara Webb and Claire Leow Bloomberg News Thursday, July 15, 2004 Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said. Indonesian stocks, the world''s second-best performers in the past month, may extend their rally as an orderly presidential election bolsters investor confidence. “Given the elections have passed off peacefully, you''re going to see more people coming into the market and more foreign direct investment, which will be a huge driver” for Indonesian stocks, said Kirsty Watt, a fund manager at Martin Currie Investment Management in Edinburgh, Scotland. The Jakarta Composite index has risen 14 percent in dollar terms during the past month, behind only the Brazilian Bovespa index among 60 global benchmarks that Bloomberg tracks. Shares of Telekomunikasi Indonesia, the nation''s largest company by market value, have risen 17 percent in dollars. Bumi Resources, the biggest coal exporter, has jumped 58 percent. Partial results in Indonesia''s first direct election for president have the former general Susilo Bambang Yudhoyono ahead of the incumbent, Megawati Sukarnoputri, by 33.6 percent of votes counted to 26.2 percent. The top two vote-getters in the July 5 poll face a Sept. 20 election if none of five contenders wins a majority. Overseas money managers had bought a net 898.7 billion rupiah, or $100 million, of Indonesian stocks as of Tuesday in the six trading days since the election, according to stock-exchange data. Concern that the presidential voting would trigger more violence contributed to losses for the Jakarta Composite in May and June. The index had not fallen for two months in a row since October 2002, when a six-month losing streak ended. A peaceful conclusion to the poll “shows every sign of happening, judging by the latest election results, even though it is not quite yet a foregone conclusion,” wrote Christopher Wood of CLSA, the top-ranked Asia strategist in last year''s survey by Institutional Investor magazine. “Southeast Asia is looking better as a region than at any time since the Thai baht blew up in the summer of 1997,” Wood wrote in his Greed Fear report on July 8. Yudhoyono, a former security minister who is the leading vote-getter so far, said at a seminar in Singapore in May that he would try to draw investors by tackling corruption and strengthening the rule of law. Government approvals for foreign direct investment fell to a nine-year low of $8.8 billion in 2002, Bank Indonesia said on its Web site. This year, approvals have lagged the pace of 2003, when the total jumped 35 percent to $13.2 billion, according to the central bank. The economy, which shrank 13 percent in 1998, is forecast by the government to grow at least 4.8 percent this year. The rupiah has rebounded in value by four-fifths from more than 16,000 against the dollar during the 1997 crisis and interest rates are at six-year lows. Indonesia''s recovery from its economic declines in 1997 and 1998 may be more important to investors than who wins the presidency, said Emil Wolter, who helps manage about $5 billion of emerging-markets investments at Pictet Asset Management in London. “Regardless of who wins, with the fundamentals put in place in the last four or five years, and coming off a low level, the stock market should be a reasonably good performer,” Wolter said. The likelihood that Yudhoyono will face Megawati in September''s runoff means that “people will be more willing to put in money,” said Watt at Martin Currie. Her investments in Indonesia include Telkom and Bumi Resources, along with Astra International, the country''s biggest auto distributor, she said.
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http://www.financeasia.com/articles/77F3B77E-9027-7E17-4BDFA8D2B61E257A.cfm G copy paste aja isinya ,kali2 artikelnya ntar expired. A Question of Investment By Jackie Horne 19 October 2004 At a roundtable discussion in Jakarta hosted by FinanceAsia and sponsored by HSBC, leading corporate executives of Indonesia''s largest companies gathered to discuss the issues they face running their businesses. In a wide-ranging discussion, these executives analyzed the effect the elections have been having on their businesses as well as the need for more investment from both outside and within Indonesia. Participants: Cesar De La Cruz - CFO, Indofood Rudjito - President Director, Bank Rakyat Indonesia (BRI) Desmond Dempsey - CFO, Unilever Indonesia Budi Setiadharma - President Director, Astra International Sugiharto - CFO, Medco Energi Hm Wityasmoro - CFO, Indosat Dedi Sumanagara - President Director, Antam Pramukti Surjaudaja - President and CEO, Bank NISP K. Keat Lee - CFO Bank Mandiri Wmp Simandjuntak - President and CEO, PGN Mandeep Singh - Head of Investment Banking, HSBC Indonesia Djaja Tambunan - SVP corporate banking, HSBC Indonesia Moderator: Nick Lord Can I start by asking what effect the extended election process has had on your businesses? De La Cruz: In the short term, the election uncertainty has affected us negatively because the rupiah has started to weaken and that negatively affected us in terms of the cost of raw materials. But in the long term there are good positive results from the elections. Confidence is coming back and if the momentum can be maintained into the second half it will be good for business. We have seen some impetus in terms of consumer spending in the first half. Consumption has increased but that has caused more competition to come in and take market share. Dempsey: Cesar must have stolen some of our market share as we did not see the same growth in consumption he saw. The first half was a bit of a struggle compared to the same period last year. We did not see lots of new money coming into the system and then coming into our products. We have seen a drive towards value for money from low-income consumers. So we need to concentrate on promotions and maintaining our brands. I suspect this will continue for some time. We also had to stockpile for contingency planning due to the uncertainties of the election. This meant getting one week''s extra stock into the trade just in case the supply chain got disrupted. Of course everything has gone quite smoothly now and so we have to sell that extra week. So there will be some sort of correction there because everything has gone well. Rudjito: BRI is more focused on the rural areas and we have the experience of crises in these areas. The election is important for us and we want things to go smoothly. For banking as a whole, after three years of consolidation, we are all starting to lend money again. A lot of the banks are now focusing on the consumer side of the business not the corporate side. For BRI, we are not just looking at the microfinance and SME side of the business but are also looking at the larger borrowers too. So even if the election results are not good and produce some instability, banking remains flexible. We can move with the changing economy. There is a parallel here between the growth in consumption and the development of democracy in Indonesia. Has this growth in consumption been good for business and investment? Lee: In this election period, investors are standing to the side and waiting to see how events unfold. Business loan growth has been quite stagnant. As the election comes to a conclusion in Q3 and Q4, we expect activities to pick up quite quickly. The informal sector continues to be one of the most resilient parts of the economy. You can see it in the growth of motorcycle sales. Investors should be watching that. So far, macro stability has produced some growth for Indonesia , but it has come about without a pick up in investment. With the election concluding and the new administration in place, we can expect a bit more clarity in terms of investment direction and more confidence for business. Accordingly, we should expect the next round of growth for Indonesia to come from investment. Antam has recently been investing and raising money for investment in the country. How has your experience been? Sumanagara: We are lucky that we sold international bonds in October last year and have also secured a loan from the local banks, and these are very important for our investment. We started a new project last year, and everything is going right for us. There has been no significant impact on our investments or on our business from the election process, apart from the slight weakening of the rupiah. The banking sector has been a huge success in the last year as share prices and recent results have shown. How is the environment for the banking sector at the moment and will it get better? Surjaudaja: Over the past two years, the banking market has improved significantly. In 1999, many of the banks were still losing money. Now banks are doing well with improving returns on equity and declining NPL rates. In the future, I don''t think things will be as good as they are now. Competition is picking up. Three years ago only about 10 to 15 banks were seriously extending loans. Now more than 25 are doing so and more banks are coming into the market. Rudjito: The Indonesian Bank Architecture Plan as outlined recently by Bank Indonesia, will help banks run an efficient banking business in the future. But this is just for banking. It won''t have an impact on the real sector. The new government must put a new vision and strategy on the industrial sector as they have done with the banking sector. We can see how successful it has been. Setiadharma: For Astra, we have some businesses that are enjoying things at the moment such as our plantations business, which is benefiting from a high CPO price. For our automotive business, the main boost has been declining interest rates. So that has triggered more people to buy motorcycles and cars as well. The market has shifted from higher end to cheaper cars. The election has not had that much effect on our economics except that people feel a little insecure. The PR from the government is not very good. The perception of Indonesia is bad. However large companies such as Honda and Toyota have been investing. They are not waiting. One year ago, Honda invested in its local engine company. It is now the third largest engine subsidiary they have in the world after Japan and the US. Lee: That is an incredible story, which no one reads about. I was not aware of that. Setiadharma: Yes it a company that produces automotive engines in Indonesia that are 100% for export. Also 30%-40% of our Kijang models are exported. Singh: I agree that that there has been more domestic investment and some inward investment. But if you look at the total FDI numbers, there is a real cause for concern. Domestic consumption is driving Indonesia. If you take that out of the picture and look at what are the real flows coming into the country in terms of investment in plants and equipment, it is not looking very good. There is no easy solution to this for that. Indonesia has to make some fundamental reforms such as the legal system. It has to do with legal reforms and creating a better operating environment for foreign companies, before the FDI really starts to come in. It is interesting that Medco Energi has decided to invest overseas with your acquisition of Australian oil company Novus Petroleum, at a time when oil prices are high and there are many assets in Indonesia that are cheap. Why did you decide that you could get a better return investing overseas than in your domestic market? Sugiharto: We bought that company to get hold of their Indonesian assets! We understood that Indonesian assets were not popular in Australia and that Novus'' stock had been going down because of these assets. We knew they wanted to sell those assets to concentrate on the US. We had lost some bids for other Indonesian companies because we are very disciplined when it comes to investing in a high cost of capital environment. Acquiring Novus Petroleum, is a strategic move. Our strategy is to acquire assets and boost our production profile in Indonesia, where we have our core competence. We will be unwinding and selling those parts of Novus that are not in Indonesia. It also makes sense for us to acquire Indonesian assets overseas, as we are a dollar generating company. That is why we have access to the global bond market. But the sovereign rating of Indonesia is one of the lowest in the region, and that costs us when we raise money. Energy companies are not really susceptible to the actual elections, but access to capital is more of an issue for us. Over the last three years, the government has wisely managed the macro economy. But once we have more political stability after the election, then our country rating should improve. This will help Indonesian energy companies to better compete with our regional peers. Sumanagara: The mining sector is also in a wait and see situation. Mining is a slow journey with long-term investments and we are still unconfident with the existing regulations. Forestry and environment issues are also problems for us. Frankly speaking, natural resources still have huge potential in Indonesia. Companies such as Antam, in upstream processes and value added areas such as in the production of ferronickel, are attracting investors. They are investing now and will invest more soon. Big companies are quite prudent about Indonesia now but if they find a good channel for their investments they are ready to invest now. The gas sector also has huge potential here. How do you find the investment scenario here? Simandjuntak: The election process has not impacted our business very much, although reserve prices are still going down. Our company is mostly in the real sector, distributing natural gas, which is much cheaper than oil. The main problem we face is the lack of infrastructure for taking gas from its remote sources to its main market in Java and Sumatra. The investment scenario is to lay transmission and distribution pipelines close to the market areas in the cities. But this needs huge capital to realize this. Our company has successfully raised money from both the debt and equity markets in the last year. And what we have realized is that investors are interested in investing in the Indonesian energy sector. Once we are able to lay the pipelines from South Sumatra to Java in 2006, and then from East Kalimantan to Java, then the real sector can become more competitive both for domestic and export markets. This is the main objective of our investments, trying to bring the gas to the end consumers. Tambunan: I recently had the opportunity to meet the Minister of Mines and Energy. He advised that the Indonesian government understands the two main areas of concern include the development of energy and infrastructure. Since the economic crisis in 1997, there has been no significant investment in power projects, roads, ports and the like. Regardless of who wins the next election, the priority will be to focus in these main areas. I do not believe that Indonesia can afford a further breakdown in infrastructure particularly if there are increasing numbers of blackouts and brown outs. Sugiharto: I think that is proving a stumbling block for any economic growth. On the one hand we have reserves of 260 billion cubic feet of gas, which is enough to feed our current level of LNG exports for a hundred years. But we only use gas to feed 20% of our power. Gas is the more environmentally friendly and can be more cost effective for power producers. There needs to be a systemic public policy to migrate from coal, which is an exportable commodity, to gas. The country needs oil for cars and for export revenues. But gas could be enormous for us. However, the investment climate for oil and gas has been diminished. The majors look at Indonesia and see the non-investment grade rating and don''t put their investable funds here. We can all see that the local banks here are feeding consumer spending, but not investment spending. But Indonesia will have to attract domestic funds to feed these infrastructure projects. I accept that many creditor banks are unwilling to accept PLN''s credit, even though it is more in transmission and distribution than generation. However, I think the real sector will be at risk because of the resistance to economic growth caused by the problems of the energy sector. Singh: I was quite surprised when I recently heard that Indonesia''s OPEC output quota is 1.3 million barrels of oil a day. But the country is only pumping out around 1.1 million barrels a day. Other countries are probably busting their ceilings because oil prices are so high. It would be good for Indonesia to increase its production to its quota level and to take advantage of high oil prices. But regrettably because of the lack of investment, it cannot produce enough even to meet its quotas. Simandjuntak: It would be great to develop our gas infrastructure. Then, the government and the companies in the real sector could develop it for our domestic use. World energy prices are going up. But once we have boosted our gas production for LNG exports, then we will be losing our ability to sustain the security of our energy supplies. Seeking new LNG markets is okay for a short-term measure, but I don''t think LNG exports will be very good for the country. Why should we import more expensive sources energy at a high price such as crude from the Middle East while we are exporting cheaper gas? It needs to be looked at by the next government. Lee: So you are saying that in the energy sector you cannot be totally left to market forces You need appropriate energy policies to support the rest of the industrialization of the economy. Simandjuntak: Compare us to South Korea. They don''t have any natural resources at all but they are still able to produce cheaper steel than us and many other countries in the world. All they have is intelligent, hard working people. Lee: This is a related issue for the banks as well. Clarity in public policy is critical for banks that are looking to manage their risks. If policy is lacking in clarity and this affects the security of cash flow for a project, then you cannot expect banks to lend. The idea that banks must support infrastructure development is quite valid but we cannot do so without understanding where the security of the cash flow that underpins the lending comes from. Simandjuntak: But Indonesian banks have too much liquidity at the moment. Lee: I know a lot of commentators are saying that because banks have low loan to deposit ratios (LDR), they are not lending enough. But be careful with that thought. As a result of the crisis a lot of loans got stripped out of the system and then came back to the banking system at a heavily discounted price which is why you see such a low LDR. Banks'' capacity to lend is more defined by capital adequacy ratio and liquidity. Banks have started lending again, but in an environment where the lending is based on the quality of the credit, not on directed lending. Accordingly, the speed of lending growth is more measured. How long will it be before the market comes up with a solution to the blackouts? Is it not time for some public policy? Lee: The market cannot do so without a public policy that secures the cash flow. Simandjuntak: Do you think Bank Indonesia regulations are too tough? Do you think you need some relaxation on where you can lend the money? Lee: The central bank has learned lessons from the crisis and is very cautions with the speed of loan growth. On the other side of the coin, we are all struggling with how to speed up investments. There needs to be a balance, especially in view of where we are in the investment cycle. At the end of the day if banks lend more there will be more growth which in turn will generate more bankable businesses. This is the virtous cycle we are looking forward to. Naturally these should be done in the context of prudent risk management processes. It sounds as if the companies around this table are starved of finance. Do you have sufficient access to capital? Wityasmoro: It is no problem at all for the telecommunication industry here. Last year we issued a $300 million bond that was subscribed up to $1 billion. Investors see Indonesia as an emerging market and the telecoms sector as high growth. Especially when we look at retail and mobile telecoms, there is lots of growth here. Last year we grew our subscriber numbers by over 60%. This year we will grow at the same rate or above. In the fixed line sector it is growing at about 15% but we hope that growth will improve with more regional markets developing. All in all it is very good and not very sensitive to the political situation. But we will always need new finance: this year we have invested $600 million and telecoms constantly needs new money. In the future we will need to invest for 3G. So we still need a lot of funds from the market. De La Cruz: Looking around this table, I don''t think the companies here are short of funds. I think the real economy is up and down the supply chain for all the companies here. The suppliers and customers of Indofood, Astra or Unilever are the ones who need credit, yet they are the ones who are not getting credit. Coming back to gas, it would be good for a manufacturer like us to use gas. We would be happy at Indofood to put in gas. But the question is who puts in the infrastructure. There is a need for policy as it is a long-term project. And unless the banks know that the government is behind it, they won''t lend. It is a chicken and egg situation and someone needs to break the cycle.
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USA: Improve Investment Climate in Indonesia\r\nTuesday, 23 November, 2004 | 22:23 WIB \r\n\r\nTEMPO Interactive, Santiago, Chilesmilen the sidelines of the Asian Pacific Economic Cooperation (APEC) Summit in Santiago, US President George W. Bush and the US Chamber of Commerce requested that the Indonesian government, represented by President Susilo Bambang Yudhoyono, improve the investment climate in Indonesia. \r\n\r\nIn addition, the Japanese government expressed its support of the new government and stated it was prepared to increase its investments in Indonesia. \r\n\r\nDuring his meeting with the US Chamber of Commerce, Yudhoyono invited investors to attend the Infrastructure Summit in Jakarta on January 17-18, 2005. \r\n\r\nResponding to this invitation, the US Chamber of Commerce requested Indonesia to improve the taxation system, security matters and law certainty in Indonesia. \r\n\r\n“If improvements takes place, US business people will certainly invest their money in Indonesia,” said presidential spokesman Dino Patti Djalal on Saturday night as reported by TEMPO journalist Bambang Harymurti from Santiago. \r\n\r\n“President Yudhoyono said that he would improve the investment climate in Indonesia,” stated Djalal. \r\n\r\nOn Saturday afternoon (20/11), President Yudhoyono held a meeting with President Bush at the Hyatt Hotel, Santiago. \r\n\r\nThe Indonesian President discussed several economic matters with Bush and congratulated him on his re-election as the US President. \r\n\r\nDuring these talks, Yudhoyono stressed the importance of US investment in Indonesia. \r\n\r\nBush said he hoped that Indonesia would honor trade contracts it has with foreign parties so that investors would continue coming to Indonesia. \r\n\r\nIn addition to economic matters, Yudhoyono told Bush that Indonesian law offocials are making serious efforts to arrest Antonius Wamang, who is alleged to be the murderer of two US citizens and an Indonesian in a shooting incident in Timika, Papua. \r\n\r\nThe Indonesian President also held a meeting with Japanese Prime Minister Junichiro Koizumi on the same day. \r\n\r\nDuring the meeting, Koizumi stated his support to the new government led by Yudhoyono. \r\n\r\n“The Japanese government and Japanese businesspeople will support efforts made by the new government in Indonesia,” stated the Japanese foreign ministry in a press release on Sunday (21/11). \r\n\r\nThe press release also mentioned how the leaders of Japan and Indonesia have agreed to form a joint private and government sector forum of both countries in order to increase investment in Indonesia. \r\n\r\nThe subjects of investment and an increase of contra-terrorism cooperation were also the main topics in meetings between Yudhoyono and Canadian Prime Minister Paul Martin as well as with Russian President Vladimir Putin. \r\n\r\nMartin requested that Indonesia open up the market for Canadian beef products and also guaranteed the hygiene of Canadian livestock products. \r\n\r\nMartin and Yudhoyono also discussed the plan of PT Inco mining company to increase its investment to US$250 million in Indonesia. \r\n\r\nMeanwhile, Putin requested Yudhoyono support Russian membership of the World Trade Organization (WTO). \r\n\r\nWhile talking during the first session of the 21 APEC leaders, the Indonesian President emphasized the importance of security cooperation among APEC member countries. \r\n\r\nYudhoyono added that the terror threats were real and terrorists were still active in planning their new attacks. \r\n\r\n“Therefore, cooperation in eradicating terrorism needs to be improved,” he stated. (Bambang Harymurti/Metta Dharmasaputra/AFP/Xinhuanet-Koran Tempo)
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Yg menarik tentang defisit US: “Deficits increase the velocity of money. Some of the money ripples out into financial markets. That sends prices up.” (Forbes, http://www.forbes.com/global/2004/1220/069.html)
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Yang menarik adalah kata Wapres Dick Cheney: “Deficits don''t matter”.
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Deficit memang DOES NOT MATTER, yang jadi matter adalah USD FALTER. Sejauh sistem keuangan bisa secara MAGICAL mempertahankan nilai USD, emangnya defisit jadi PROBLEM. (Maklum saja orang sana BUANYAK AKAL, salah satunya pembebasan pajak REPATRIASI PROFIT).
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http://news.ft.com/cms/s/8990e66e-52f4-11d9-8845-00000e2511c8.html Indonesia sees big surge in stock market By Taufan Hidayat Published: December 21 2004 02:00 | Last updated: December 21 2004 02:00 Since Indonesians handed a landslide victory to self-styled reformer Susilo Bambang Yudhoyono in the September presidential election, the Jakarta Stock Exchange''s main index has gained more than 20 per cent. Both domestic and foreign investors have rushed into the market, fuelling a surge in liquidity that helped push average daily turnover in November to US$180m, more than double the level in the same month last year. With the bourse having hit record highs, Indonesian companies are talking about turning to the local equity market for capital and analysts are predicting an upturn in activity in 2005. “Confidence is high and that seems justified given what has happened on the political front and that on the ground the economy has surprised on the upside,” says Tim Condon, head of Asian financial markets research at ING. Many analysts expect interest rates to rise next year from their current six-year lows. This will lead to an increase in the cost of funds in the country''s fledgling corporate bond market. But analysts say there has also been a general recovery in sentiment towards Indonesian companies, which, except for a select few such as auto-maker Astra, have been largely avoided by investors since the Asian financial crisis. “There are a number of stocks that have been dead for a long time that are having life breathed back into them,” says Michael Chambers, head of research at CLSA in Jakarta. Currently, raising funds on the stock market remains the exception to the rule. Only 11 IPOs have been registered by the Jakarta stock exchange so far this year, raising a total of just US$225m, about the amount that Malaysian budget carrier Air Asia raised in its October public offering. Only four companies are currently formally applying for IPOs for next year. Indonesia''s top companies also continue to raise much of their capital from bank loans. According to Standard & Poor''s analyst Greg Pau, Indonesia''s top 25 companies draw 83 per cent of their corporate borrowings from loans, compared with an estimated 60-70 per cent in Malaysia or Thailand. But change is in the air. Jakarta Stock Exchange directors say they expect as many as 30 IPOs in 2005. Excelcomindo, the mobile phone provider in which Telekom Malaysia bought a 27.3 per cent stake for $314m this month, is expected to go public in the first half of 2005 and Lion Air, the low-cost airline, has said it would like to follow suit, although a recent fatal crash may affect those plans. Indofood, the world''s largest instant noodle maker, may sell up to 10 per cent of subsidiary Bogasari Flour Mills in an IPO in the first half of next year, says Franciscus Welirang, an Indofood vice-president. Mr Welirang cautions that those plans remain at an early stage. But he says the IPO, which the company originally considered in 2000, would raise badly needed capital for the company''s efforts to reduce its debt burden and pursue overseas expansion. Salim Group is not the only conglomerate making noises about a public offering. Bakrie and Brothers, run until recently by Aburizal Bakrie, Indonesia''s chief economic minister, has signalled recently that it was looking at merging three infrastructure subsidiaries and listing them in an IPO that could coincide with a government push to increase public works spending. The government is also expected to get in on the act. Jakarta plans to offer 30 per cent of Bank Negara Indonesia, the country''s second largest state bank, in a secondary offering next year, while the management of state-owned toll road operator Jasa Marga has said it plans to raise up to US$220m in a long-awaited IPO. Analysts remain cautious. Not all the IPOs may be good deals. The Bogasari offer, for example, would be at least the third time that the flour maker''s ownership structure has been changed - similar moves in the 1990s by the Salim Group drew annoyed responses from minority shareholders There still remains a possibility that the current positive sentiment may be short-lived. Current volumes, while a vast improvement over recent years, remain short of the US$200m-$300m daily average turnover seen before the Asian crisis. Much also still depends on the ability of the new government to deliver on its promises. “Indonesia has a rich vein of rhetoric,” says Mr Chambers of CLSA. But “in recent years action has been somewhat short in following”. Additional reporting by Taufan Hidayat
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Asian stocks top 2005 shopping list\r\n\r\nHONG KONG: Shares are overwhelmingly the investment choice of Asian fund managers for 2005, with Hong Kong their top pick for its strong consumer spending growth and pegged currency that keeps exports competitive, a survey has found. \r\n\r\nThe poll by Reuters and monthly investment magazine Benchmark showed utilities and telecoms among the preferred stock sectors because they depend on domestic demand rather than exports suffering from a weak dollar. \r\n\r\nThe survey found that seven out of nine respondents preferred to hold stocks over the next 3 months and six of them over the next year, even as Asian bourses hit multi-year highs. The only other investment choice named by respondents was real estate. \r\n\r\n“We like the long-term Asia domestic growth story and think the next decade will be Asia’s for Asians,” said Alex Boggis, director at Aberdeen International Fund Managers Ltd., Hong Kong. \r\n\r\nMSCI’s broadest index of Asia Pacific shares outside Japan hit its highest level in nearly 5 years on Wednesday. \r\n\r\nBoggis said he preferred companies facing long-term domestic growth rather than export-orientated firms. Many export-led economies shivered this year as the dollar crumbled to record lows on fears the United States, the world’s biggest economy, would struggle to fund its budget and current account deficits. \r\n\r\nSo while the Philippine, Korean and Taiwanese markets were among the least popular in the survey, Indonesia and China were favoured destinations over the next year because of their domestic market potential. \r\n\r\nHong Kong, where the benchmark Hang Seng Index has risen 13 percent in 2004 to its best levels in almost 4 years, was the favourite market for the first quarter. \r\n\r\nKeeping Hong Kong humming: “Although China faces an investment slowdown, its consumption will be robust and that spillover will keep Hong Kong humming next year,” said Bratin Sanyal, head of Asian equity investments at ING Investment Management. \r\n\r\nOver the next three months, four out of the nine said they preferred Hong Kong, one plumped for Hong Kong and India while Indonesia and India got one vote each. For the next 12 months, three respondents preferred Indonesia, two respondents each liked Hong Kong and China while one chose India. \r\n\r\n“Indonesia has been one of our favoured markets for quite some time as we believed that political risks were being overstated by the market,” said Ian Beattie who manages the New Star Asian Opportunities Fund. Indonesia’s new president Susilo Bambang Yudhoyono is seen as the most capable leader of the country since it plunged into chaos during the 1997-98 Asian financial crisis. \r\n\r\nAnd although Indonesian stocks have struck record highs after the October elections, leading Asian markets with a 45 percent rise this year, Beattie felt corporate valuations were reasonable as returns on capital were very high. \r\n\r\nAmong sectors, the survey found respondents preferred property plays, in particular Hong Kong property, for the next 3 months while utilities were the least popular sector over both 3 months and one year. \r\n\r\nSanyal, however, said ING liked utilities because they rely on domestic demand for growth. “We want to invest in companies with high yield, earnings growth and which are domestic-oriented … We find a combination of all three in utilities and telecom.” \r\n\r\nMaterials, oil & gas and property stocks were popular for the short-term only, while technology and electronics were the investments of choice for the longer term. Risks which posed the biggest threat to Asian markets were high oil prices and rising US interest rates, the survey found. —Reuters
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Metals boom is not over January 9, 2005 Most analysts agree that steady demand from China will keep prices high, writes Richard Webb. Don''t sell your resource shares just yet. Metal prices plunged by up to 8 per cent last week but analysts believe the falls are temporary. They say the commodity boom is far from over. While they believe commodity prices will not soar this year like they did during last year''s metal pricing bonanza, practically all expect base metal prices to remain at historically high levels - high enough for Australia''s big miners such as BHP Billiton and Rio Tinto to turn in record profits. Demand for raw materials from China remains strong, they say, and there is no sign of the booming Chinese economy making a crash landing soon. Chinese demand has been supporting decade-high prices in many raw materials and as such there seems little chance that commodity prices will fall sharply in coming months. Shane Oliver, head of investment strategy at AMP Capital Investors, says the prices of base metals such as copper, nickel and zinc will continue to rise this year, but not at anything like the rate at which they soared in 2004. “There is further upside there,” he said. “The best is behind us in terms of the price momentum but stockpiles of most metals around the world remain extremely low while demand remains strong.” One of the elements of last year''s metals price boom was that metal stockpiles also plunged when the prices soared. These stockpiles will need to be replenished this year, and this will increase demand even if global economic growth begins to slow. Deutsche Bank head of global markets research David Plank says the CRB index - which measures a broad range of commodities including copper, gold, nickel and oil - is less than 3 per cent below its high of just before Christmas, despite last week''s base metals rout. “While small moves can have a big impact on the pocket, what we are seeing are squiggles in the data at the moment. It''s not the end of the global boom, it''s more an adjustment at the margin,” he said. In a report last week, Goldman Sachs JBWere deemed any pullback in the share price of the major resource stocks to be a buying opportunity. The stockbroker retained its overweight resource sector recommendation. “Our belief in the longer-term ‘'stronger for longer’' theme is unchanged, and we would continue to view any pullback in the sector as a buying opportunity,” it said. The ABN Amro commodities team is not so sure. They believe the fourth quarter of 2004 will be seen as the peak of this commodity cycle, and while prices will not necessarily tumble this year - mainly because metal stockpiles fell so dramatically last year - they believe there is a chance metals prices will begin to ease. “In general, 2005 looks to be a transition year for base metal markets. Having enjoyed deep inventory draining deficits in 2004, we expect markets to start moving to balance, notably in the second half of 2005,” ABN Amro said. Metal markets were clearly spooked last week. There were two reasons for this: a sharp rise in the greenback and the re-emergence of concern over the slowing Chinese economy. The US dollar jumped following the release of minutes from the December Federal Reserve board meeting, which indicated the US central bank would push interest rates up quicker than some had anticipated this year. Higher interest rates support a currency. Base metals are traded around the world in US dollar prices. When the US dollar rises, base metal prices fall because a rising greenback means that metals become more expensive for non-US buyers. Dr Oliver believes the greenback will eventually start heading lower again. “I think the broader trend in the US dollar is down. The US dollar has been falling because of the trade and budget deficits and the trade deficit is at a record level and getting worse.” Concern over China has been bobbing up every so often for months, and emerged again last week following news that the Chinese Government would not approve any additional aeroplane deliveries this year. There are already 147 planes due for delivery to Chinese airlines this year, and a Chinese official said this was enough to meet demand. Because of that, no further approvals would be made, he said. But two days later there was another report that China Southern Airlines, the country''s largest domestic carrier, was about to make a $US2.4 billion ($A3.2 billion) order for 20 Boeing 7E7 jets, for delivery for the Beijing Olympic Games in 2008. Dr Oliver said concerns over China were being overplayed. “The Chinese economy is slowing from 10 per cent annual growth to about 8 per cent, which is still very strong. It''s a very soft landing if you can call it a landing at all,” he said. “Inflation is running at 2.8 per cent, so they don''t have a problem there, and the unemployment rate is still reasonably high.” http://www.theage.com.au/articles/2005/01/08/1104832350616.html?oneclick=true
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