Reuters: Hot Stocks: STOCKS NEWS INDONESIA-Morgan Stanley cuts Indonesia equities' rating

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STOCKS NEWS INDONESIA-Morgan Stanley cuts Indonesia equities' rating Aug 3rd 2012, 06:09 Fri Aug 3, 2012 2:09am EDT Morgan Stanley downgraded Indonesian equity markets to 'neutral' from 'positive' saying potential higher currency volatility due to widening current account deficit could cap valuations, despite resilient domestic earnings. Indonesia's structural growth story will continue to be driven by strong domestic demand combined with infrastructure and capacity expansion-led investment cycle, Morgan Stanley said in a note on Friday. "However, high commodity and external capital linkages could increase the volatility of IDR, thus increasing equity risk premiums and affecting valuations negatively," the note said. Morgan Stanley also downgraded ASEAN equity markets' second-half outlook, saying "structural investment growth remains intact but market vulnerability is increased". Thailand is the most preferred market because it is relatively immune to global growth-shocks while Singapore is the least preferred with defensive dividend strategy, the note said. The research house rated Indonesian financials and healthcare sectors 'overweight' while energy and industrial sectors were rated 'underweight'. Among Indonesian stocks, Morgan Stanley's top picks are PT Kalbe Farma Tbk and PT Bank Rakyat Indonesia Tbk , while PT United Tractors Tbk and PT Bumi Resources Tbk are the least preferred. 1237 (0537 GMT) (Reporting by Andjarsari Paramaditha) **************************************************************** 12:30 STOCKS NEWS INDONESIA-Macquarie raises ACE Hardware target price Macquarie Equities Research raised its target price on PT ACE Hardware Indonesia Tbk to 8,000 rupiah from 6,000 rupiah, backed by a higher medium-term earnings track and improving valuation. "ACES continues to deliver outstanding growth and operational performance, and we believe the stock remains inexpensive ... vs its potential. ACES remains one of our highest conviction small cap Indonesian consumer picks," Macquarie analyst Lyall Taylor in a note on Friday. Shares of the commercial and industrial supplies company have gained 45 percent this year until Thursday, according to Thomson Reuters data, while revenue and operating margins continued to grow. The brokerage kept its 'outperform' rating on shares of the company, which is also a retailer of household appliances. At 1222am (0522 GMT) company's stock was down 2.5 percent at 5,800 rupiah while the broader index was down 0.48 percent. 1223 (0523 GMT) (Reporting by Andjarsari Paramaditha,; Editing by xx) Link this Share this Digg this Email Reprints

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