Why, that is the hot question hovering many minds who came in direct contact with us when we released "strong sell" for INDY and made a "shift" to DOID, and in addition, gave a slight clue for SMCB prospect.
The answer is not as simple as you might have thought, but we would attempt to make it simple. We start this way. Get ready? We quoted from Bloomberg yesterday without providing any further hint. This what they said, "Some stocks in the Asia-Pacific region fell after receiving notice that they will be deleted from MSCI country indexes at the end of the month." ( http://www.bloomberg.com/news/2011-05-17/asian-mining-stocks-rise-after-copper-gains-japan-shares-slide-on-tepco.html ) Now, you know where it is heading to. Established in 1968, MSCI (intially standing for MorganStanley and Capital International) indices have been long known as the first set of global stock market indices for non-U.S. markets. Country-specific indices, such as MSCI Indonesia Investable Market Index, has become the most leading provider of investment decision support tools to over 5,000 clients worldwide, ranging from large pension plans to boutique hedge funds. So, having got into or taken out of MSCI indices is like being recommended for a job or not. MSCI indices are like friends of friends of friends. The only problem which should be worth concern is that these friends are not just ordinary friends, they are all big pockets. Like you in doing "arisan", you talk to each other what you have inside and what you have left off. MSCI indices, such as MSCI Indonesia Investable Market Index, are not LQ45 or local exchange-issued indices so on. It is the impact that really matters. All big international brokerage houses, hedge funds, institutional players, Buffet should also be included, when they talk about Indonesia as Goldman's Jim O'Neill BRIC term is extended to include Indonesia, MSCI investable index is the first thing pop up into their minds. The impact of being included or take out of the list is further complicated by the fact that alternative investment vehicle like mutual funds or ETFs even simply mimicking what these leading world indices have in their constituents. This is what they called "passive investing". As the indices are getting rebalanced or reconstituted every certain period of time, all relevant holdings of these investment vehicles not only should but they do have to adjust accordingly and follow strict rule of establishment. And think of how many global / regional mutual funds or ETFs follow this MSCI indices. We have tens of relevant ETFs and funds with direct exposure to the MSCI Indonesia Investable Index, and tens or more other hedge fund and small boutiques who build up portfolio base on this index constituents. All of this are hundred and thousand millions dollars. More than enough to fly and sink any single stock within days without sorry. Having said that, we take this opportunity to share what our colleagues in MSCI released yesterday, May 16, 2011, as a result of their quarterly re-balancing. We attach here Indonesian-related items relevant to what we have been saying. [image: MSCI IMI.png] That is why: 1. Sell INDY because it is withdrawn and taken out from the MSCI Index, and as its secondary offering are approaching without any accompanied financial strengthening/re-arrangement like DOID is doing with its creditors, market will treat this as simply lack of external funding credentials, and to this extent it explains in lesson 101 why secondary offering would lower the stock price. 2. Maintain to buy DOID because like BRPT, DOID is maintained under the MSCI index. And, the successful financial arrangement with various local and international lenders, including among other MorganStanley Bank International Ltd. would further boost the stock price in anticipation of the right issues. A relative strong shareholders and management behind DOID, including TPG and GIC, strengthen further the prospect of this company, and this explains why all of those 8 foreign banks do not think to lose their single penny by providing the biggest loan ever extended to an Indonesian company within the past 2 years. And, not only that, they have just successfully hedge their loans. (http://bataviase.co.id/node/673361 ; http://bataviase.co.id/node/676686). All of this recent development justifies the side talk in some trading houses overseas regarding the plan of some ETFs such as EIDO et al to raise the weight of DOID holding into their portfolio. 3. SMCB buy? What else to say, it is the only new addition to MSCI Indonesia index with foreign business affiliation, strong management and cash flows and has a strong group industry relevant to the current cycle of market amid commodity volatilities. And, perhaps, it is another proof in line with what Finland's JOM Fund Management's Asia equity funds recently said that they cut their exposure to Indonesian consumer stocks because of concerns over profit margins as food prices surge, and is instead buying construction activities-related firms. Now, we rest the case of "Strong Sell" INDY, we will elaborate the case of other two Dead Man Walking, ASII and GGRM, anytime a couple of days ahead. We will start with GGRM. '+' On Tue, May 17, 2011 at 6:29 PM, positif01 <[email protected]> wrote: > Good evening Indonesian happy holidayers, our warm regard from across the > Atlantic, > > We just want to drop a short message that who has sold INDY (Indika Energy) > on Monday prior to the holiday would highly possibly be making a correct > trading/investing decision. Those who did not may save the a few times > before the end of May to save the corresponding stake in their portfolio or > shift it to the soon-running after DOID (Delta Dunia Makmur). > > Why and how? Well, it is still holiday anyway there in Indonesia, we do not > want to bother and rob the happiness you might have felt at this relaxing > moment, and we are also intrigued by knowing what local media would tell the > news before we finally do tomorrow. Again, no rules are broken here. > No Rajaratnam's octopussy network of insider trading. This is a legitimate > knowledge though not everybody knows it as fast as a few of us here can. One > other thing, we are keen to watch and read in case one among you want to > present the "buying" case for INDY using whatever technical and fundamental > approach you may deliver. > > Last but not least, there will be some happiness too for those who buy on > the weakness for Holcim Indonesia, SMCB. > > Enjoy your holiday's meal. > > '+' >
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