Indonesia Daily Focus: Still bullish on JCI amid the madness. Maintain HOLD on SMRA, trading buy on dips - UOBKH

'Twas a bloody Monday too in the US, as lack of major news and earnings report in the US brings investors to focus on Europe's turmoil and reflecting it on the market. It does seem like the debt issue is becoming deeper and extended than we initially thought it would, creating new concerns globally.

China's lower PMI data also did not fail to contribute to all the negativity in the market. Should we be on the lookout for China's slowdown too? Nouriel Roubini, “Dr. Doom”, noted for his 2008 crash forecast, is on the lookout for China's hard landing, most likely after 2013. He notes that China is now awash with excessive supply of money, infrastructure and property – a lot of ghost town of residential development and smelters closed to prevent global prices from plunging.

Our analyst, Mark Po, thinks its time for us to take a look back and review on the China cement sector, as it was one of the best performers YTD, outpacing the HSIndex (CNBM by 58.6% and Anhui by 27.2%). Hence might be a target of profit taking in the near term considering there is a slow down in number of new projects in 1Q11, down -9.4% YoY, and weaker sentiments from the likely continued China's tightening measures.

On a lighter note, we are still bullish on HK retail sector, as more retailers are planning to do IPO within 2011-2012, with the newest addition Chow Tai Fook on its plan to raise US$3-4bn by 1Q12. Which will increase attractiveness to this jewelry sector.

Meanwhile, I expect the JCI to be trading sideways for this week. Though foreign investors were net sell on Monday trading, I believe domestic players will bottom fish today, on the lookout to buy big cap names on dips, as yesterday's drop provides a good opportunity to accumulate on selective names. Mid to long term view on Indonesia is still bullish.