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