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We believe Indonesia/ASEAN today is behaving like the India of
2007-08. Let us explain. While MXASJ (MSCI Asia ex-Japan)
peaked on 30 October 2007, MSCI India continued to rise and did
not peak until January 2008. Investors flocked to India then as the
domestic growth story and it had become a very crowded trade by
end 2007. Investors today appear to be flocking to
Indonesia/ASEAN as the domestic growth story. But as Figure 1
illustrates, MSCI India then underperformed MXASJ by 21% over
the next six months.
● While MSCI China’s price-to-book is just 10% above the 2008-09
lows, we highlight that for Indonesia, the current price-to-book of
3.55x is more than double the 1.5x at the 2008-09 lows. Figures 2
and 3 also highlight that India’s price-to-book versus ROE
premium on 31 December 2007 was 49% versus Indonesia’s 51%
currently. Malaysia’s premium is 26% and the Philippines’
premium is 23%.
● While year-to-date there has been net foreign selling out of
Emerging Asia (ex-China) of US$9.2 bn, there has been net
foreign buying of US$2 bn in Indonesia, US$0.5 bn in the
Philippines and US$0.2 bn in Thailand. The net foreign buying
year-to-date of US$ 2bn in Indonesia is smaller than the net
foreign buying in India of US$17.2 bn in 2007 but India is a bigger
market.
MXASJ (MSCI Asia ex-Japan) peaked in October 2007, but
MSCI India only peaked in January 2008
We believe Indonesia/ASEAN today is behaving like the India of 2007-
08. Let us explain. While MXASJ (MSCI Asia ex-Japan) peaked on 30
October 2007, MSCI India continued to rise and did not peak until
January 2008. Investors flocked to India then due to its domestic
growth story and by end-2007 it had become a very crowded trade.
Investors today appear to be flocking to Indonesia/ASEAN on the
account of the domestic growth story. But as Figure 1 illustrates,
MSCI India then underperformed MXASJ by 21% over the next six
months.
India’s price-to-book versus ROE premium in Dec 2007 was
49% versus Indonesia’s 51% currently
While MSCI China’s price-to-book is just 10% above the 2008-09
lows, we highlight that for Indonesia, the current price-to-book of 3.55x
is more than double the 1.5x at the 2008-09 lows. Figures 2 and 3
also highlight that India’s price-to-book versus ROE premium on 31
December 2007 was 49% versus Indonesia’s 51% currently.
Malaysia’s premium is 26% and the Philippines’ premium is 23%
But Indonesia appears to be less crowded than India in
2007
While year-to-date there has been net foreign selling out of Emerging
Asia (ex-China) of US$9.2 bn, there has been net foreign buying of
US$2 bn in Indonesia, US$0.5 bn in the Philippines and US$0.2 bn in
Thailand. The net foreign buying year-to-date of US$2 bn in Indonesia
is smaller than the net foreign buying in India of US$17.2 bn in 2007
but India is a bigger market.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We believe Indonesia/ASEAN today is behaving like the India of
2007-08. Let us explain. While MXASJ (MSCI Asia ex-Japan)
peaked on 30 October 2007, MSCI India continued to rise and did
not peak until January 2008. Investors flocked to India then as the
domestic growth story and it had become a very crowded trade by
end 2007. Investors today appear to be flocking to
Indonesia/ASEAN as the domestic growth story. But as Figure 1
illustrates, MSCI India then underperformed MXASJ by 21% over
the next six months.
● While MSCI China’s price-to-book is just 10% above the 2008-09
lows, we highlight that for Indonesia, the current price-to-book of
3.55x is more than double the 1.5x at the 2008-09 lows. Figures 2
and 3 also highlight that India’s price-to-book versus ROE
premium on 31 December 2007 was 49% versus Indonesia’s 51%
currently. Malaysia’s premium is 26% and the Philippines’
premium is 23%.
● While year-to-date there has been net foreign selling out of
Emerging Asia (ex-China) of US$9.2 bn, there has been net
foreign buying of US$2 bn in Indonesia, US$0.5 bn in the
Philippines and US$0.2 bn in Thailand. The net foreign buying
year-to-date of US$ 2bn in Indonesia is smaller than the net
foreign buying in India of US$17.2 bn in 2007 but India is a bigger
market.
MXASJ (MSCI Asia ex-Japan) peaked in October 2007, but
MSCI India only peaked in January 2008
We believe Indonesia/ASEAN today is behaving like the India of 2007-
08. Let us explain. While MXASJ (MSCI Asia ex-Japan) peaked on 30
October 2007, MSCI India continued to rise and did not peak until
January 2008. Investors flocked to India then due to its domestic
growth story and by end-2007 it had become a very crowded trade.
Investors today appear to be flocking to Indonesia/ASEAN on the
account of the domestic growth story. But as Figure 1 illustrates,
MSCI India then underperformed MXASJ by 21% over the next six
months.
India’s price-to-book versus ROE premium in Dec 2007 was
49% versus Indonesia’s 51% currently
While MSCI China’s price-to-book is just 10% above the 2008-09
lows, we highlight that for Indonesia, the current price-to-book of 3.55x
is more than double the 1.5x at the 2008-09 lows. Figures 2 and 3
also highlight that India’s price-to-book versus ROE premium on 31
December 2007 was 49% versus Indonesia’s 51% currently.
Malaysia’s premium is 26% and the Philippines’ premium is 23%
But Indonesia appears to be less crowded than India in
2007
While year-to-date there has been net foreign selling out of Emerging
Asia (ex-China) of US$9.2 bn, there has been net foreign buying of
US$2 bn in Indonesia, US$0.5 bn in the Philippines and US$0.2 bn in
Thailand. The net foreign buying year-to-date of US$2 bn in Indonesia
is smaller than the net foreign buying in India of US$17.2 bn in 2007
but India is a bigger market.
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