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

Comments (2)
  • cejedw
    , contributor
    Comments (59) | 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 (59) | 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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