atans1

Why investors are bullish on Indonesia

In Indonesia on 15/12/2011 at 5:35 am

The Indonesian stock market was the best performer in emerging Asia in 2009 and 2010 when it was up 87% and 46% respectively. So far this year, it is Asia’s second best performer behind the Philippines’ 2.05% rise. It has risen 1.26%. According to Thomson Reuters StarMine, the market is trading at 13.4 times this year’s projected earnings. Thailand is trading at 11 times, Singapore is at 12 times, the Philippines 12.2, Malaysia at 13.3 and the whole of Asia at 10.9.

Indonesia has one of the fastest growing middle classes in the region – up from 80 million five years ago to 130 million now. That’s more than half of this country’s 240 million strong population. That number is expected to grow. By 2020, many think that Indonesia’s middle class will be wealthier than many in Asia.

Largely insulated from the troubles overseas (but remember that China is a big importer of Indonesian exports like themal coal and palm oil) because of strong domestic demand, economists say Indonesia will see growth rates stay stable or possibly even rise next year, at a time when many in the region are cutting their growth forecasts.

So it is not surprising that Indonesian consumers are feeling far more confident about their prospects than ever before, and they consistently rank as some of the most optimistic in Asia about their economic future.

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