Indonesia, Getting Hotter By The Day

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

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Four Pillars of GDP: Driven by private consumption

While the title of this article could genuinely be referring to global warming, and not incorrectly, in this case it’s meant to reflect the continuing success with which the country’s market is performing.

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

Return-on-equity is still the highest among its Asian neighbors, and the nation’s GDP is growing at a healthy 5% clip thanks to private consumption and investment.

Government consumption was a slight drag in the latest round, but this isn’t expected to last. The current government has set big plans for infrastructure and energy investments.

Highest ROE in Asia

Analysts expect Indonesia to deliver the highest ROE in Asia in 2017. In fact, ROE is expected to be above 16% through 2019.

This high profitability is reflected in the current year’s 2.7x price-to-book value.

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

Overall, Indonesia is the second 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: With high profitability comes a rich PB valuation.

Momentum: High EPS growth and moderate price momentum.

Risk: Low beta to Asia ex-Japan.

Strong performance in Information Technology and Materials

Top 3 largest sectors: Financials: 27% of the market; Consumer Staples: 24%; Consumer Discretionary: 12%.

Best sector & stock: Information Technology: +64.5%; Indoritel Makmur Internasional Tbk PT: +84.3%.

Worst sector & stock: Utilities: -12.6%; Perusahaan Gas Negara (Persero) Tbk PT: -14.0%.

*CE is consensus estimates

Article by Dr. Andrew Stotz, Become A Better Investor

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David I Kass Clinical Associate Professor, Department of Finance Ph.D., Harvard University Robert H. Smith School of Business 4412 Van Munching Hall University of Maryland College Park, MD 20742-1815 Phone: 301-405-9683 Email: [email protected] (link sends e-mail) Dr. David Kass has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management and Business Finance, and is the Faculty Champion for the Accelerated Finance Fellows. Prior to joining the faculty of the Smith School in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis). Dr. Kass has recently appeared on Bloomberg TV, CNBC, PBS Nightly Business Report, Maryland Public Television, Business News Network TV (Canada), Fox TV, American Public Media's Marketplace Radio, and WYPR Radio (Baltimore), and has been quoted on numerous occasions by Bloomberg News and The Wall Street Journal, where he has primarily discussed Warren Buffett and Berkshire Hathaway. He has also launched a Smith School “Warren Buffett” blog. Dr. Kass has accompanied MBA students on trips to Omaha for private meetings with Warren Buffett, and Finance Fellows to Berkshire Hathaway’s annual meetings. He is an officer of the Harvard Business School Club of Washington, DC, and is a member of the investment and budget committees of a local nonprofit organization. Dr. Kass received a Smith School “Top 15% Teaching Award” for the 2009-2010 academic year.