Indonesia Features Highest Return On Equity

Indonesia Features Highest Return On Equity

Watch the video with Andrew Stotz or read a summary of the country profile on Indonesia.

Four Pillars of GDP: Driven by private consumption

Overall, Indonesia is seeing positive growth, and all pillars are contributing to GDP growth.

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Berkshire Hathaway Warren BuffettSince the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More

Like most economies, Indonesia’s economy is mainly driven by private consumption and investment. Net exports offer almost nothing to GDP expansion. Private consumption contribution rose to 3.46% from 2.4% in the second quarter of 2016.

Indonesia – Highest ROE in Asia

Analysts expect Indonesia to deliver the highest ROE in Asia in 2017 at 16.1%. This is reflected in 2017’s price-to-book being the second most expensive in Asia. Only India trades at a higher PB.

A. Stotz Four Elements: Indonesia’s rank relative to Asia

Overall, Indonesia is the third most attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum and Risk.

Fundamentals: Indonesia has the best ROE in Asia with 2017 consensus estimates of 16.1%.

Valuation: The nation is moderately attractive, as multiples are supported by fundamentals.

Momentum: Indonesia has moderate price and earnings momentum.

Risk: Indonesia has the most volatile stock market in Asia.

Strong performance in Materials and Energy

Top 3 largest sectors: Consumer Staples: 26% of the market. Financials: 25%. Consumer Discretionary: 12%.

Best sector & stock: Energy: +33.4% & Bumi Resources: +335.3%

Worst sector & stock: Telecom: -6.7% & XL Axiata: -17.7%

This article first appeared on Become A Better Investor

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Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.

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