Seeking Alpha

O'Neill: Indonesia now needs to deliver

  • “Jokowi’s victory is potentially as important as Modi’s was for India,” says Jim O'Neill, formerly of Goldman Sachs and "BRIC" coinage fame.
  • Indonesia, says O'Neill has massive potential and Jokowi could be the man to unleash it, but he's got plenty of vested interests to take on first. Then there's expectations - they're perhaps higher in Indonesia than they are in India, meaning there's a particularly large amount of room for disappointment.
  • The Jakarta Composite is up 21.1% YTD, and 9.1% over the past year, and stocks trade at a pricey 16x forward earnings, notes Macquarie's Sam Le Cornu. It's a 20% premium to the 10-year historical average and not far from their 2008 peak valuations.
  • ETFs: IDX, EIDO, IDXJ
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Comments (2)
  • cejedw
    , contributor
    Comments (38) | Send Message
     
    The biggest problem in Indonesia is the fake data. Indonesian government said inflation is 5% y-y, but as I live in this country, I realize the real inflation is not less than 20%. Low-but fake-inflation data makes interest rates are artificially low. When the interest rates are low, the stock market valuation is inflated.
    11 Sep 2014, 10:31 AM Reply Like
  • cejedw
    , contributor
    Comments (38) | Send Message
     
    Indo is trading @ 20% premium? Wow. When it is trading @ premium vs historical average, and it is trading @ premium vs other emerging markets, it only means 1 thing.........
    11 Sep 2014, 10:53 AM Reply Like
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