J.P.Morgan Asia Pacific Equity Research ASEAN First To Market

Research evidence excerpt

J.P.Morgan Asia Pacific Equity Research ASEAN First To Market

Asia Pacific Equity Research

ASEAN First to Market 07 July 2026

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Indonesia Equity Strategy (Khoi Vu, CFA/Benny Kurniawan, CFA), Indonesia

Offense wins games, defense wins titles

Last week, the Indonesian Parliament and Government agreed on the macroeconomic assumptions and projections of the

2027 draft budget (link). In our view, the defensive posture with a 1.8-2.4% deficit/GDP target would be welcomed by

investors . This, combined with the recent emphasis on budget efficiency and easing energy prices, should improve the flow

outlook for Indonesian equities as equity positions recover from lows. However, key concerns remain: (1) potential budget

pressures if the macro environment doesn’t align with expectations, (2) strong US Dollar in 2H26, (3) upcoming El Niño impact,

and (4) uncertain policy implementation. We continue to focus on quality stocks: ASII, MAPA, ICBP, ANTM, and BBCA.

Manila Electric Company (Jelline Gaza, CFA) (MER PM, OW, PT Php760.00), Philippines

El Niño, oil-led inflation reprieve bode well for MER; remain OW

The inflation path and political sensitivities around tariff-reset timing have dominated the pushback on MER. The stock has

fallen 12% from its all-time high last April 29 and underperformed the PSEi by 18%, partly on MSCI-related flows. We see

tailwinds emerging. MER benefits directly as El Niño lifts energy sales, while cooling inflation improves how the market reads

both the timing and extent of the much-awaited distribution tariff reset. Management now guides for higher net income this year

(JPMe: 6% y/y), and volumes have swung back to positive territory in 2Q26, growing an indicative +0.6% y/y (link) from -1.8%

in 1Q26.