JPMorgan has upgraded its view on Indonesian stocks just weeks after a negative stance prompted the government to sever all official ties with the bank.
Jakarta stopped using the U.S. investment bank as a primary dealer or an underwriter for sovereign bonds after JPMorgan's Asia-Pacific equity strategists in November slashed the country's equity rating outlook by two categories to "underweight".
In research sent to clients on Monday, however, JPMorgan's team said it was closing the "tactical underweight" recommendation in place since November and instead advised a "neutral" stance.
"Our tactical downgrade two months ago was driven by the risk of Indonesia underperforming the Asia Pacific ex-Japan and emerging market indices as investors de-risked," the analysts wrote. "Redemption and bond volatility risks have now played out, in our view."
A spokesman for the bank denied there was any link between Indonesia's rebuke of the bank and the change in its analysts' views.
"JPMorgan's research is independent and anything published is a result of extensive and objective analysis. Our research views and recommendations on Indonesia are no different," he said.