This is my personal comment about Indonesia, with inflation rising above 10% (and likely to go to 15% as fuel price subsidies are reduced), this is one of the riskier inflation-prone markets in the region, in my view. Central bank reacted by raising its reference rate to 8.5%, but it will have to do considerably more to bring down excess demand. With both
presidential and parliamentary elections due next year, I think it will find it politically difficult to act decisively.
For longer term, I can see the attractions of this market. GDP appears to be growing fairly sustainably at around 6%. The commodity-based economy throws up a number of stocks that stand to do well as long as the global resources boom continues. Valuations are not stretched (as they were last summer), with PE now down to 12x.
Next question: Until the inflation risk is under control, what can we do in Indonesia?
No comments:
Post a Comment